HMRC’S new VAT domestic reverse charge for building and construction services comes into effect from 1 March 2021 and could affect 1.2m construction workers/builders/roofing companies.
Where the reverse charge applies, rather than the supplier charging and accounting for the VAT, the recipient of those supplies accounts for it.
You must use the reverse charge from 1 March 2021, if you’re VAT registered in the UK, supply building and construction industry services and:
- your customer is registered for VAT in the UK
- payment for the supply is reported within the Construction Industry Scheme (CIS)
- the services you supply are standard or reduced rated
- you’re not an employment business supplying either staff or workers, or both
- your customer has not given written confirmation that they are an end user or intermediary supplier
What you’ll need to do
- Check if your customer has a valid VAT number.
- Check your customer’s CIS registration.
- Review your contracts to decide if the reverse charge will apply, and tell your customers.
- Ask your customer to confirm whether they are an end user or intermediary supplier.
- Find out how to record the reverse charge in your accounts.