September 23rd, 2019 / Insight posted in MKS News

Construction services relief at delay in domestic reverse charge

HMRC has postponed introducing the domestic reverse charge for building and construction services until October 2020 – originally due to be introduced in October 2019. The Federation of Master Builders calls this a “sensible and pragmatic” measure.

In its announcement, HMRC said: “Government has listened to the concerns raised by industry representatives and recognises that some businesses in the construction sector require more time to implement the VAT domestic reverse charge for building and construction on 1 October, and that this is close to the date the UK is due to exit the EU.”

Businesses have spent the last year focusing on the delivery of Making Tax Digital for VAT. HMRC recognises that software developers might not have had the resource to prepare for the domestic reverse charge simultaneously.

HMRC has confirmed that it remains committed to introducing the domestic reverse charge in the construction sector. It is a robust compliance strategy for tackling potential VAT fraud using “tried and tested compliance tools”.

Our domestic reverse charge experts have already spent the last 12 months working with businesses across the entire construction sector to implement the correct systems and processes. Those who have not yet done so need to plan for it now and work with their supply chain to ensure compliance.

If you need advice or help, please get in touch with our domestic reverse charge experts.