CONSTRUCTION INDUSTRY NEW VAT RULES
Are you in the Construction Industry? Are you aware of the new VAT rules to come into effect on 1 October 2019? The government are introducing new measures to reduce VAT fraud in the Construction Industry by shifting the responsibility for paying the VAT along the supply chain. HMRC plan to issue final guidance before October 2018.
This will impact all businesses making purchases of services within the Construction Industry and there will be no minimum size threshold. Supplies to an end consumer (commercial or domestic) will not be included in the reverse charge scheme.
A new ‘domestic reverse VAT charge’ (RC) will be introduced whereby the recipient rather than the supplier would account for the VAT due. This new method will work in exactly the same way as the Construction Industry Scheme (CIS), where the supplier’s tax is paid directly to HMRC by the customer. With this new reverse VAT charge, the customer will pay the VAT element of their purchase directly to HMRC rather than to the supplier for later payment to HMRC.
Under RC, a main contractor would account for the VAT on the services of any sub-contractor and the suppler does not invoice for VAT. The customer (main contractor) accounts for VAT on the net value of the supplier’s invoice and at the same time deducts that VAT – leaving a nil net tax position.
If you wish to discuss how this will impact you, please call us at Grant Considine, Chartered Accountants on 01330 823333 or email email@example.com