HM Revenue & Customs (HMRC) has agreed to delay the implementation of the construction reverse charge scheme after significant opposition by industry experts.
The VAT reverse charge scheme for building and construction supplies was intended to go into effect from 01 October 2019.
However, a number of major construction associations called on the Government to delay the scheme, as the sector did not have the provisions or the resources to effectively implement the regime this year.
As a result, HMRC has now confirmed that the introduction of the domestic reverse charge for construction services will be delayed for a period of 12 months until 01 October 2020.
Welcoming the move, Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “Contractors and sub-contractors weren’t ready for reverse charge VAT and we are delighted that the Government has listened to our industry campaign to seek a delay.
“The Government has given us double the time we recommended and this will help us work together to set up improved online guidance, hold workshops and make sure the entire industry understands what reverse vat charge means for their business.”
Under the new scheme, the responsibility for the reporting of VAT moves from the seller to the buyer. As per HMRC guidance, this means the customer will be liable to account to HMRC for the VAT in respect of purchases rather than the supplier (this is the ‘reverse charge’).
Find out more about the reverse charge scheme and the delay here.
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