Earlier in the year, we told you all about a new measure by HMRC relating to the reverse charge of VAT for building and construction services that was due to come into effect on 1 October 2019. It was proposed that for certain supplies of construction services (‘specified services’), the customer would be liable to account for the VAT in respect of those purchases rather than the supplier (the ‘reverse charge’).
Well, the good news is that all the contractors and businesses affected now have an extra 12 months to prepare for the change as HMRC have decided to delay its implementation. Citing a lack of preparation amongst businesses and the looming Brexit deadline they have decided to hold off and spend the next year providing “additional guidance and support to make sure all businesses will be ready for the new implementation date”. This has come as welcome news to the construction trade associations that have been pressuring the government to rethink the measure, including the UK’s largest, the Federation of Master Builders. They argued that a lack of awareness, coupled with the risk of a no-deal Brexit, could be disastrous for the construction industry so they have described the move as “sensible and pragmatic”.
For those businesses that were well on their way preparing for the change, HMRC has said that “where genuine errors have occurred, HMRC will take into account the fact that the implementation date has changed” including those who have already changed their invoices or registered for monthly VAT returns.
We will keep you updated with any further changes to the reverse charge but more information on the decision to delay the measure can be found on the HMRC website.
Our previous article outlining the proposed changes can be found here.