Domestic reverse charge for the construction sector deferred again

As part of HMRC’s ongoing range of measures designed to reduce the financial burden on businesses during the Coronavirus crisis, the implementation of the VAT self-supply regime for construction services has been delayed a second time until 1 March 2021. The measures, already delayed once before from October 2019 to October 2020, aim to reduce VAT fraud in the construction industry.

Moore Kingston Smith comment

While the self-supply mechanism may well assist HMRC in tackling certain types of VAT fraud, it brings with it some major changes to how VAT is applied to the construction sector. It has widespread implications for the sector, especially on cash flow, with many contractors and subcontractors no longer collecting VAT from their customers. This further delay in its introduction will come as a welcome relief to the sector.