UK Domestic Reverse Charge – Construction Services effective 1 October 2019

This planned Domestic Reverse Charge will apply to building and construction services supplied in the UK under the Construction Industry Scheme. It will be a significant VAT change for main and subcontractors and HMRC are already advising that affected businesses consider:

• Whether the new Reverse Charge will affect your sales or purchase system or both
• How your accounting systems and software need to be updated to deal with the changes – especially considering the Making VAT Digital reporting requirements
• What the impact on businesses Cash Flow will be once the business will no longer be able to charge VAT on affected sales
• Training required for VAT Accounting staff to deal with the new accounting approach

Not all supplies of construction services will be affected but contractors will need to identify whether their customer if the ultimate End User if they are to determine the correct VAT approach to take.

Whilst the Reverse Charge applies to services covered by the CIS there is a key difference in the VAT accounting rules for this new charge. Unlike the CIS the VAT Reverse Charge will apply to the whole of the value of the materials and services provided.

To ensure your business is ready for the new regulations and the impact on Cash Flow has been fully considered do contact the Centurion VAT team at emailus@centurionvat.com