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Domestic Reverse Charge VAT
The domestic reverse charge is a major change to the way VAT is collected in the building and construction industry. It will come into effect on 1 March 2021 and has been bought in to prevent missing trader fraud. The customer receiving the service will pay the VAT due to HMRC rather than paying the supplier.
The reverse charge will apply to you if:
You are VAT registered
The services you supply are standard or reduced VAT
The supply is with the scope of the Construction Industry Scheme
Will apply to both labour & materials
It will not apply if:
The services are supplied to an end user
The supplies are zero rated
We understand this is a major change, so we recommend that you:
Check if your customer has a valid VAT no
Check your customer CIS registration
Review your contracts to decide if the reverse charge will apply and advise your customers
Ask you customer to confirm whether they are an end user or intermediary supply
Make sure your accounting system can account for the reverse charge
Consider whether the change will have an impact on your cash-flow
Update your invoice to reflect the reverse charge
Details of which construction services the reverse charge applies to can be found here
We are here to help you make this transition easier. Just give Helen a call on 07730621977.
