The VAT change for builders – known as the Domestic reverse VAT charge – has been delayed.
It was due to come into force on 1st October 2019, but the Domestic reverse VAT charge has now been delayed by a year until 1 October 2020.
It will be a major change in how VAT is collected in the building and construction industries. The change means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier.
It will only apply to individuals or businesses registered for VAT in the UK, and will only apply to you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS). The change does not apply if the service is zero rated or if the customer is not registered in the UK.
HMRC appreciate that this will be quite a change for a lot of businesses so have stated that they will apply ‘a light touch’ when applying penalties for non-compliance if they see that the business is trying to get it correct.
Read more information on the Domestic reverse VAT charge on the HMRC website here.