Much to the relief of many in the construction industry, the UK government has announced a twelve-month delay to the introduction of the CIS VAT Reverse Charge. It will now only take effect from October 2020.
Many in the industry have expressed their relief at the move. Brian Berry, Chief Executive of the Federation of Master Builders, hailed HMRC’s decision as ‘sensible and pragmatic,’ adding that:
“To plough on with the October 2019 implementation could have been disastrous given that the changes were due to be made just before the UK is expected to leave the EU, quite possibly on ‘no-deal’ terms.”
Now construction and building supply companies will have an extra twelve months in which to train staff, and update their invoicing, payment systems and tax records in preparation for next autumn.
Under the reverse charge system, any VAT charged on goods or services would no longer be paid to the supplier, but would instead go directly to HMRC. The aim of the new system is to reduce fraud and simplify how VAT is paid. It also does not apply to ordinary consumers or final customers of building and construction services.