- On September 20, 2019 /
- By fatBuzz /
- In Industry News
HMRC has just announced that the VAT domestic reverse charge that was due to come into force on 1st of October 2019 has now been delayed until 1 October 2020.
This comes after a survey from industry representatives that raised concerns that many businesses in the construction sector are not ready to implement the VAT domestic reverse charge by the original intended date. The 12 month delay will now allow more time for these companies to prepare for the changes, while also avoiding the risk of coinciding with the changes that will be brought about by the UK’s exit from the European Union.
The purpose of the VAT domestic reverse charge is to make sure that UK customers receiving supplies of construction services must be the ones to account for the VAT due on these supplies on their VAT return, rather than the UK supplier.
This removes the scope for fraudsters to steal VAT due to HMRC and follows similar measures previously implemented in response to criminal threats for mobile phones, computer chips, emissions allowances, gas and electricity, telecommunication services and renewable energy certificates.
This delay now presents a major opportunity for businesses in the construction industry to ensure they are compliant by the new start date of 1 October 2020.
Companies should check whether the reverse charge will affect their sales, purchases or both, as well as ensuring their accounting systems are equipped to deal with the reverse charge and that all staff responsible for VAT accounting are familiar with how this reverse charge will operate.