Changes to the way VAT is collected in the construction industry set to begin next month.

From 1 October, the domestic VAT reverse charge will mean that customers receiving the service will have to pay the VAT directly to HMRC, rather than paying it to the supplier. 

This will only apply where the supplier and customer are both registered for VAT in the UK and will not apply to end users (consumers, private individuals etc.) or intermediary suppliers. 

Brought in to crack down on VAT fraud, the launch of the charge has been met with criticism from SMEs who have claimed that they have not had adequate opportunity to prepare, according to the Chartered Institute of Taxation (CIOT). 

Vice-Chair of CIOT’s Indirect Taxes Sub-committee, Linda Skilbeck, said: “We are concerned about the combination of a substantial lack of awareness and lack of preparedness, even among those businesses who are aware of the measures.

“We urge the government to delay the current implementation date. A start date of 1 April 2020 is more appropriate. This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies.”

You can find out more about how the upcoming changes will impact your business by reading the guidance notes on thededicated HMRC site or by speaking to your tax adviser.

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