Important Announcment
Reverse charge VAT for construction services has been delayed by a year, just three weeks before it was due to take effect.
The way VAT is collected in the building and construction industry was due to change on 1 October 2019.
A brief published by HMRC states the following:
Industry representatives raised concerns that some businesses in the construction sector would not be ready to implement the VAT domestic reverse charge.
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.
HMRC remains committed to the introduction of the reverse charge and has already increased compliance resource. In the intervening year, 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.
Effective dates have now been updated to 2020, HMRC’s updated guidance can be found here.