- 13th August 2019
- Posted by: Suzy Hill
- Category: Business News, VAT
Construction industry reverse charge VAT – are you ready?
With less than two months before major changes to VAT invoicing take effect for the construction industry, two thirds of SMEs in the sector know nothing about the new reverse charge regime.
It comes into effect on 1 October 2019 and means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier.
How will it affect suppliers of construction services?
- Vat on payments for construction services will be paid directly to HMRC, not to the supply chain partner.
- You will not be able to charge VAT on sales invoices for construction services
- This will impact your cash flow
- You may need to make changes to your accounting software
What contractors need to do
If you’re a contractor you’ll also need to review all your contracts with sub-contractors, to decide if the reverse charge will apply to the services you receive under your contracts. You’ll need to notify your suppliers if it will.
What sub-contractors need to do
If you’re a sub-contractor you’ll also need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end user or intermediary supplier.
Now is the time to start planning for the Construction industry reverse charge procedure, contact us for help and advice.