HMRC delays VAT reverse charge

(2 minutes to read)

A domestic reverse charge means the UK customer who gets supplies of construction services must account for the VAT due on these supplies on their VAT return rather than the UK supplier.

HMRC has postponed the introduction of the VAT domestic reverse charge for construction services for 12 months to 1st October 2020.

AAT Tax Policy Expert Brian Palmer, explains, “Seemingly, and in spite of whatever views people have on the government’s approach to Brexit, in this area at least this appears to be a government that listens.”

In the brief, HMRC states: ‘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 1st October, and that this is close to the date the UK is due to exit the EU.

‘The government remains committed to the introduction of the reverse charge. HMRC has already increased compliance resource and put in place a robust compliance strategy for tackling fraud in the construction sector using tried and tested compliance tools. In the intervening year, HMRC will use the time to focus additional resource on identifying and tackling existing perpetrators of the fraud.

‘To help businesses get ready in the next 12 months, HMRC will continue to work closely with the construction sector to raise awareness and provide additional guidance and support to ensure all business will be ready for the new implementation date.’

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Brian Palmer added, “This slowdown to the introduction of what is a well-intentioned measure makes absolute sense. With much of the focus in the last year or so being on the delivery of Making Tax Digital for VAT, many software developers have not had the bandwidth to have their products ready to support those affected. This is particularly true given all the current uncertainty.

“When it eventually comes in, the VAT domestic reverse charge will mean UK customers who get supplies of construction services must account for the VAT due on these supplies on their VAT return, rather than the UK supplier.

“Its purpose is to reduce the leakage of VAT owed to HMRC, and follows similar measures introduced in response to criminal threats for mobile phones, computer chips, emissions allowances, gas and electricity, telecommunication services and renewable energy certificates.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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