The 1st of March 2021 to be precise, and it is a significant modification to the way VAT is recorded, reported, and paid in the UK construction industry.
Whether you are or main contractor or a sub-contractor, you're going to be affected, however, there are some exceptions:
Services supplied to non-VAT registered individuals, such as homeowners or domestic users
End users or connected intermediaries such as property landlords or owner/occupiers
Work done overseas
Businesses using the Flat Rate Scheme (reverse charge supplies will have to be accounted as output VAT)
Temporary workers supplied by your business where you are responsible for paying them, rather than it being contracted out
Work should still be invoiced and accounted for at all time.
HMRC has published a list of services that are under the new reverse charge regime. Where there is a mixed supply, where some is covered by the reverse charge and other parts by the normal VAT element, you should apply the reverse charge to the whole supply.
"This will then be subject to a de minimis of 5%!"
The reverse charge for VAT will affect many parts of your business including contracting, invoicing and your overall accounting procedures, but do remember this differs depending on whether you are a main contractor, a sub-contractor ... or both.
Any work invoiced on or after the 1st of March 2021 will be affected by the reverse charge for VAT.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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