VAT reverse charge for the construction industry

As you may be aware, HMRC is introducing a new VAT reverse charge for the construction industry on the 1st March 2021. This will affect any businesses who are VAT registered and either a sub-contractor supplying CIS regulated construction services to another VAT registered business (who is not the end-user) or a contractor who purchases CIS regulated construction services of a VAT registered sub-contractor.

What’s changing on 1st March 2021?

The VAT domestic reverse charge for building and construction services is a change in how VAT is handled for certain kinds of construction services. Those supplying construction services to a VAT registered customer will no longer account for the VAT, instead the customer will account for the VAT.

Who does it apply to?

It applies only to VAT registered businesses who are supplying or receiving services that are reported under CIS. However, the reverse charge does not apply to end-users such as the people who use the building or landlords.

Please contact our office if you require further information relating to the VAT reverse charge for the construction industry, or visit the Gov website through the link here.