VAT: deferral of new reverse charge for the construction industry

The date on which the new reverse charge was to come into force in the construction industry has been deferred by a year until 1 October 2020.

This was announced by HMRC in Revenue and Customs Brief 10/2019: https://www.gov.uk/government/publications/revenue-and-customs-brief-10-2019-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation/revenue-and-customs-brief-10-2019-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation

The extra time should be used by accountants and their clients to prepare for the new reverse charge next year.  The issues remain as raised in our newsletter dated 5 July 2019.

HMRC has acknowledged that some clients will already have taken steps towards the new reverse charge.  Where monthly VAT returns have been applied for to make input tax recovery quicker for sub-contractors, this can be reversed on HMRC’s website.  Where invoices have been changed to meet the new reverse charge requirements which lead to genuine errors, HMRC have said they will take into account that the implementation date has changed.

If you have any queries regarding the reverse charge or any other VAT issue, please contact on Kevin Hall on kevin.hall@gabelletax.com.