VAT: REVERSE CHARGE FOR BUILDING AND CONSTRUCTION SERVICES
VAT: reverse charge for building and construction services…
From 1 October 2019, the customer rather than the supplier will have to account for VAT due on certain building services when they are reported under CIS regulations.
Who is likely to be affected?
Businesses involved in buying and selling construction services. It does not apply to zero-rated supplies of construction services.
General description of the measure
The measure will introduce a VAT reverse charge on certain building and construction services.
The measure will, for certain supplies of construction services (‘specified services’), mean that the customer will be liable to account to HMRC for the VAT in respect of those purchases rather than the supplier (the ‘reverse charge’). The reverse charge will apply through the supply chain where payments are required to be reported through the Construction Industry Scheme (CIS) up to the point where the customer receiving the supply is no longer a business that makes supplies of specified services - these businesses are referred to as ‘end users’.
The reverse charge will exclude businesses that supply specified services to connected parties within a corporate group structure or with a common interest in land. In these circumstances, the supplies in question will then revert to normal VAT accounting rules.
The reverse charge will include goods, where those goods are supplied with the specified services.
We expect more guidance to be released regarding this in the very near future and we will release more detailed information as it becomes available.
Please contact us if you have concerns or questions about how this may affect your business.