On 6th September 2019, HMRC published a Policy Paper confirming the Domestic Reverse Charge VAT for Construction Services will be delayed for a period of 12 months, meaning the new implementation date will be 1st October 2020.
Construction Industry representatives raised concerns that not all businesses were ready for original start date of 1st October 2019. Therefore, to help these businesses HMRC have agreed to a delay of 12 months. This will also help avoid any changes that Brexit brings about.
For more detailed information, please find the link to the Policy Paper https://www.gov.uk/government/publications/revenue-and-customs-brief-10-2019-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation/revenue-and-customs-brief-10-2019-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation
HMRC will also update the Reverse Charge Guidance found at https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services
As from 1st October 2019 if you are working as a subcontractor for a main contractor (who isn't the end user of the work) and they operate within the CIS Scheme the way you charge VAT is changing. Please ensure your software has the ability to deal with this. (our CIA software has been updated to deal with the change).
HMRC have introduced this change to protect themselves from the most common fraud they suffer in the Construction Industry.
HMRC estimates around £100m a year is lost from subcontractors billing main contractors (and being paid) VAT but then "disappear" before paying the VAT to HMRC.
CLiP IT Solutions are pleased to say we have passed HMRC’s checks and the CIA software will be updated to meet all new VAT Making Tax Digital (MTD) requirements as part of the tax year end update.