Blogs/Vlogs

VAT domestic reverse charge for the construction industry

What are the proposed changes? 

  • The introduction of a domestic reverse charge on specified services
  • The new rules came into effect from 1 March 2021 
  • The customer will be liable to account for the VAT in respect of their purchases instead of the supplier
  • The reverse charge will apply through the whole supply chain until the customer receiving the supply is no longer a business that supplies specified services.

VAT

Exceptions to the normal rules...

If a business supplies specified services to:

  1. a connected party within a corporate group structure, they will be excluded from the new rules and must continue to account for VAT using normal accounting rules
  2. a business that is not a construction business, e.g. a shop, public house, etc. the reverse charge does not apply.

These rules will have impact on zero rated construction services.

Specified services are defined as:

  • Construction, alteration, repair, extension, demolition or dismantling of 
  • Buildings or structures (whether permanent or not) including offshore.
  • Any works forming, or to form part of the land, including walls, roadworks, power-lines, electronic communications apparatus, etc.
  • Installation in any building or structure of systems of heating, lighting, air-con, ventilation, power supply, drainage, sanitation, water supply or fire protection.
  • Internal cleaning of buildings & structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration.
  • Painting or decorating the internal or external surfaces of any building or structure.
  • Other services such as site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.

The next step

If you have any questions regarding the new reverse charge rules for ‘specified services’, please contact Michelle Dale at m.dale@uhy-uk.com or your usual UHY adviser. 
 

Let's talk! Send an enquiry to your local UHY expert.