Blogs/Vlogs

Reverse Charge for construction services – postponed!

10 September 2019

The reverse charge for construction services has been pushed back a year to 1 October 2020.  This was a fundamental change to the way VAT is accounted for in the construction industry. 

Many clients and even advisors had been struggling to understand the detailed application of the new rules so this is a welcome postponement.

The change would have required the customer to account for VAT on supplies of qualifying construction services rather than the supplier.  The move was intended to combat fraud in the sector and reduce the loss to the Treasury.

However, following draft regulations last year, a delay in producing guidance and even a clarification at the end of August 2019 HMRC announced on 6 September that the implementation is delayed.  This is good news as even clients who were aware of the change and making changes to their accounting systems were finding the application difficult to follow.

The timing could have been better with businesses implementing Making Tax Digital during the same time frame and it is positive HMRC have listened to representations and agreed to defer the implementation date.  This allows businesses more time to prepare.

If you wish to discuss this further, please do not hesitate to contact me or your local UHY representative to discuss your options.

Alternatively, visit our property sector page to see how our expertise can help you.

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