The introduction of the domestic reverse charge for construction services will be delayed for an additional 12 months until 1 October 2020, the UK Government announced on Friday.
Industry representatives have repeatedly raised concerns that some businesses in the construction sector are not ready to implement the VAT domestic reverse charge for building and construction. A recently published study by the FMB showed that 69% of construction SMEs had not even heard of the charge with a further 67%, who had heard of the charge, not prepared.
In order to help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 1 October 2020. This will also avoid the changes coinciding with Brexit.
For the upcoming 12-month period, HM Revenues & Customs have stated “HMRC will focus additional resource on identifying and tackling existing perpetrators of the fraud. It will also work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date.
“HRMC recognises that some businesses will have already changed their invoices to meet the needs of the reverse charge and cannot easily change them back in time. Where genuine errors have occurred, HMRC will take into account the fact that the implementation date has changed.
“Some businesses may have opted for monthly VAT returns ahead of the 1 October 2019 implementation date which they can reverse by using the appropriate stagger option on the HMRC website.”
For more information on VAT Reverse Charge, you can read our recent explainer here.
Written by Sam McDonald