The government was concerned at fraud on the provision of labour in the construction industry.
A consultation was published on 20 March 2017 following the Spring Budget 2017. The consultation proposed several potential solutions. A summary of responses to the consultation will be published on 1 December 2017.
The government has decided not to bring in legislative measures proposed in the consultation to address the fraud in the Construction Industry Scheme. The government has chosen to proceed with the VAT reverse charge.
Responsibility for paying the VAT will be passed along the supply chain to remove the opportunity for the VAT to be stolen.
The changes will have effect from 1 October 2019. A further consultation will be published regarding draft legislation in spring 2018, and a final draft of the legislation and guidance will be published by October 2018.