VAT Reverse Charge For Construction Delayed
As Parliament came to a close, HMRC has issued new “guidance” that announced the delay, a 12-month delay until October 2020, of the domestic VAT reverse charge for constructions services. With major construction industry unease, the delay has been greatly appreciated by the sector.
More and more businesses publicly stated their unpreparedness for the October 1 deadline. Especially when one considered the October 31st, 2019 Brexit deadline.
What Has HMRC Said About The VAT Reverse Charge Delay?
HMRC has stated that they remain committed to the introduction of a reverse charge VAT scheme. And have invested in developing more compliance resources to help more businesses get on board with the change.
The key purpose of the charge is to combat fraud within a sector with historic VAT fraud levels. The “tried and tested compliance tools” available with the VAT reverse charge has already been tested in other sectors. Therefore, in the eyes of HMRC, the scheme does work.
What Will A 12-Month Delay Achieve?
According to HMRC:
“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.
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.”
HMRC understands that some businesses have changed the way they both invoice and pay VAT. However, for those who have already changed to meet the changing regulatory framework, HMRC will allow and take into account such changes when engaging with VAT-related issues. However, for those who are not ready, HMRC will roll out a range of resources and training toolkits to help businesses understand the VAT Reverse Charge for Construction Services.
If you’d like to find out more about the VAT Reverse Charge for Construction Services and how it could impact your construction business, why not get in touch with Prestige Business Management today? We can help you understand how the charge could impact on your business, call us today on 0203 773 2927 to book a one-to-one telephone or in-person consultation without VAT Reverse Charge for Construction Services specialists.