HMRC delays introduction of VAT reverse charge to 1 October 2020 - a (temporary) relief for businesses
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HMRC delays introduction of VAT reverse charge to 1 October 2020 - a (temporary) relief for businesses

HMRC delays introduction of VAT reverse charge to 1 October 2020 - a (temporary) relief for businesses

On 8 July and 22 August, we wrote in our blog about the imminent arrival of the new VAT reverse charge (originally due to be implemented on 1 October 2019) and concerns as to the widespread lack of awareness and preparedness in the industry.  As we reported back in August, bodies such as the Federation of Master Builders were putting pressure on HMRC to delay the introduction and on 6 September HMRC published a paper confirming the new regime will be delayed for an entire year – until 1 October 2020.

You can access the policy paper via the following link here

As a reminder, the domestic reverse charge is an anti-fraud measure and in practice, means that the end-user of the construction services will now need to account for the VAT due on the supplies on their VAT return rather than the supplier itself, as currently is the case.

Businesses in the sector will need to adapt their accounting systems to ensure compliance and plan ahead to take into account the potentially negative impact as the intermediate suppliers/users will no longer have the VAT payments from customers to assist in terms of cash-flow.

HMRC has decided to delay the implementation in order to assist business and allow more time to prepare for the changes – this will also avoid the double-whammy from any Brexit repercussions.

Some businesses may have already pre-empted the changes and HMRC has confirmed they will take into account the changed implementation date in respect of any genuine errors.

For further information, check our blog posts which we update regularly.

Contact our experts for further advice

View profile for Estelle NguyenEstelle Nguyen

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