NEWS

VAT Reverse Charge for Construction Firms

HMRC are introducing new rules from 1 October 2019 for the construction industry governing how Vat will be accounted for.

From that date, all businesses providing construction services, within the Construction Industry Scheme, will need to apply a “reverse charge” for output Vat, unless the customer is not Vat registered, an “end user”, or within certain other exclusions.

An “end user” is a customer that does not make supplies of CIS services, such as the property owner or a main contractor who sells a newly completed building to a customer.

The reverse charge will require the supplier to state on their invoice that the supply is subject to the reverse charge. The Vat on the total Vatable supplies will not be paid by the customer to the supplier and the supplier will not account for output Vat on the sales value of their services in their Vat returns. The customer will however reflect the Vat both as input and output tax in their records and Vat return, but again the reverse charge will apply to their own supplies.

Those affected should consider how these changes will impact on them both from a financial point of view, particularly cash flow, and in respect of their accounting systems.

The changes could have a particular impact for clients using the flat rate scheme and for them it might be worth considering leaving the scheme to facilitate the recovery of input tax.

Published guidance from HMRC can be found here

If you would like to discuss how this might affect you, please talk to your usual contact at Morris Crocker.

 

03/04/2019

Latest news...

26/06/2019

See our new guides for property landlords

The 2019/20 tax year has introduced a raft of changes for landlords and property investors.  From 6 April landlords have seen mortgage interest tax relief phased down even as higher allowances for

READ MORE

Newsletter Sign Up

Sign up to keep in touch to receive our latest news and industry updates.

Yes, I would like to receive email updates providing me with the latest finance news, advice guides and details of future events.



REF: MC/NL/1.1