VAT domestic reverse charge for construction delayed
There has been a last-minute change to the start date for the VAT domestic reverse charge (DRC) for building and construction services. This was scheduled to begin on 1 October 2019. It is now delayed until 1 October 2020.
The DRC changes the way that VAT is accounted for. The recipient of specified construction services accounts for the VAT due on the supplies on their VAT return, rather than the supplier. This major change entails adaptation to invoicing and accounting systems, and a negative impact on cashflow for some businesses. The government cites concern that some businesses are not yet ready to implement the change – and possible coincidence with Brexit – as the reasons for the delay.
Where businesses have changed their invoicing to be DRC-compliant and cannot reverse this in time, HMRC will take the change in implementation date into account should genuine errors occur. Businesses which have now adopted a monthly VAT return cycle, can change back during the interim if they prefer. If you would like assistance, please do contact us. Despite the delay, the government is still committed to the DRC, and businesses which have not yet assessed how they need to comply should still do so.
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