Construction: a change for the diary
If you are VAT-registered and work in construction, take note. The VAT domestic reverse charge for building and construction services (DRC) was due to take effect from 1 October 2020, and you are likely to have had a letter from HMRC giving this as the start date. In view of Covid-19, the DRC has now been postponed until 1 March 2021.
The charge is a business to business measure, intended to combat missing trader fraud. It applies to VAT-registered businesses where payments have to be reported under the Construction Industry Scheme: not to consumers. In outline, it means that rather than the supplier accounting for VAT on specified building and construction services, the recipient does so.
The DRC is not a new tax: and it doesn't alter the VAT liability. But it does change the way VAT is collected, and has other significant consequences. As well as the new administrative nuts and bolts needed to put the scheme in place, it will also impact cash flow for firms which have hitherto benefited from handling output tax on their supplies.
If you have yet to gear up for the DRC, we recommend that you review the position now, looking at what it will mean for sales and purchases, and checking that relevant staff, accounting systems and software are ready. The latest information is here https://bit.ly/2CpWgEP. Note that a last-minute change means businesses who are 'end users' or 'intermediary suppliers' will have to confirm this to their subcontractors. If this affects you, we should be delighted to advise.
Got a question?
Why not fill out our quick contact form below and a member of the team will respond shortly.
Receive our FREE monthly eNEWS, keeping you up to date with the latest news.
Registration on our website is quick and simple. On registration you will benefit from:
- Our FREE monthly eNEWS email newsletter which will keep you up to date with the latest news (this service is optional)
- On registration we'll email FREE resources to you with our compliments.
You only have to register once. You will be given a username and password that you can use at any time to log back into our website.