Autumn Budget 2018 – VAT anti-avoidance: construction industry reverse charge

We reported the announcement in Autumn Budget 2017 that the government intended to bring in a new reverse charge within the construction industry:

Currently, small VAT registered sub-contractors charge VAT on their services to the main contractors.  It is perceived that some suppliers go missing after collecting the VAT from their customers without paying that VAT to HMRC.  This is a form of missing trader fraud which is to be tackled with a proposed new domestic reverse charge.

A VAT domestic reverse charge will be introduced to prevent VAT losses by shifting responsibility for paying VAT along the supply chain to the customers.

The new rules will have effect on and after 1 October 2019.

Contractors and sub-contractors in the construction industry will be affected by this measure.