VAT Domestic Reverse Charge for Building and Construction Services

From 1 October 2019 a new VAT reverse charge comes into effect for building and construction services, where payments are required to be reported under the Construction Industry Scheme. 

Broadly it means that when a business receives a supply of building and construction services for onward sale, the recipient of the services (the contractor) accounts for the VAT on behalf of the supplier (the sub-contractor). 

It does not change the VAT liability, but shifts the responsibility to account for the VAT away from the subcontractor onto the contractor. 

The changes may adversely affect those on the Flat Rate Scheme and could also impact subcontractors’ cash flow and liquidity.

We will be contacting affected clients in due course, however if you would like more detail on the changes, please get in touch 0116 2423400

Katie Kettle, Technical Manager

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