The Current Situation
For most in the construction industry, the 1st of October 2019 meant big changes to how VAT was to be accounted for.
The CIS VAT reverse charge was put in place as a measure of preventing fraud in the construction sector, with UK customers who get supplies of construction services accounting for the VAT rather than the UK supplier.
This has now changed, with a further year given to meet the terms of this new legislation, the ruling won’t come into force until 1st October 2020.
Gov.UK cites the reasoning as;
“Industry representatives have raised concerns that some businesses in the construction sector are not ready to implement the VAT domestic reverse charge for building and construction on 1 October 2019.
To help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for 12 months until 1 October 2020. This will also avoid the changes coinciding with Brexit.”
The Good News
The sudden delay of this plan until October 2020, means a couple of things for those within the construction sector, or those running accounts for this sector. You will have more time to become compliant, a promise of dedicated resources from HMRC to help with this compliance, and additional time to find suitable software and process solutions that will enable you to meet the necessary criteria.
If, like many others, you want to become compliant now and get ahead, feel free to contact us to discuss options on 0330 355 0011.