HMRC has announced a one-year delay on the introduction of the Domestic VAT Reverse Charge for Construction Services, to 1 October 2020.  This allows more time for businesses registered for VAT within the construction sector to adjust, which will enable them to fully prepare for the implementation.

HMRC has given their reasons, stating “Government has listened to the concerns raised by industry representatives and recognises that some businesses in the construction sector require more time to implement the VAT domestic reverse charge for building and construction on 1 October, and that this is close to the date the UK is due to exit the EU.”

HMRC has said they recognise that some businesses will have already amended their invoices to meet the needs of the reverse charge and won’t be able to change them back in time. Therefore, they will take the change in implementation date into account where genuine errors have occurred. However, this doesn’t mean that businesses can continue to issue such invoices, and steps should be taken to revert back to the old invoicing system.

Also, where businesses have already opted for monthly VAT returns, they should reverse this as soon as possible.

Businesses who are not yet ready for the original effective should now use the extra time available wisely, and consider the changes they will need to implement, such as changes in software and cashflow implications.

If you have any further questions concerning the VAT domestic reverse charge, please just contact us here at the office.