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Changes to VAT in the Construction Sector postponed until October 2020

Changes to VAT in Construction Sector


HMRC announced on Friday 6th September 2019, that the domestic reverse charge for construction services will be postponed until 1st October 2020.


This deferment was likely as a result of concerns from industry bodies that there was insufficient time for the changes to be implemented and that the proposed changes may also affect the cash flow of smaller taxpayers.

The purpose of the changes was to reduce significant VAT frauds in the construction sector, so pending a change of policy, this is only a pause to the eventual implementation next year.

HMRC published a Revenue & Customs Brief (10/19) which acknowledges that some businesses may already have changed their invoice to meet the needs of the reverse charge rules and if these invoices cannot be changed quickly, HMRC will accept no error by the taxpayer.

Equally, if a taxpayer has switched to monthly returns, taxpayers can log into their HMRC VAT account and change their VAT return periods back to quarterly.

What HMRC do not mention is that some taxpayers may have either come off the flat rate scheme or even unregistered in advance of the reverse charge being implemented.

It should be possible to re-register for VAT.  In terms of the flat rate scheme, once you exit the scheme, you must wait 12 months before being permitted to join the scheme again.  It may be HMRC will take a sympathetic approach to traders who left the flat rate scheme in advance of the now deferred reverse charge rules.

Don’t leave this to chance, speak to us about VAT, our advice is not as expensive as you think and will ensure your business is VAT compliant.

Please contact our VAT Director, Jason Croke or fill out the form below for further information.

07912 308529 or 020 7554 9567

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