HMRC has announced a postponement of the VAT reverse charge for building and construction services for 12 months, until 1 October 2020, in response to industry representations asking for more time to prepare (see Revenue & Customs Brief 10/2019).
Nevertheless, HMRC stresses it remains committed to the introduction of the reverse charge, which is part of a ‘robust compliance strategy for tackling fraud in the construction sector using tried and tested compliance tools.’ In the meantime, HMRC will ‘work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date’.
Where businesses have already changed their invoices to comply with the planned October 2019 start date, HMRC says it will take this change of date into account ‘where genuine errors have occurred’.
Those businesses who have opted for monthly VAT returns ahead of 1 October in expectation of becoming repayment traders will be able to reverse that option by using the appropriate stagger option on HMRC’s website.
The Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) (Change of Commencement Day) Order, SI 2019/1240, amends the original instrument introducing the VAT reverse charge on construction services, changing the implementation date from 1 October 2019 to 1 October 2020.
The CIOT has welcomed the 12-month delay, which it hopes will lessen the likelihood of disputes between suppliers and customers as to whether or not VAT should be charged. The CIOT’s indirect taxes sub-committee vice-chair, Linda Skilbeck, noted ‘substantial evidence of a lack of awareness of this change, and a lack of preparedness even among those businesses who are aware of it’. The CIOT believes a start date of October 2020 should allow time for HMRC to operate a dedicated information campaign.
Richard Croker, a consultant on construction tax at Pinsent Masons, said it was ‘reassuring that HMRC have listened to industry in postponing this change’. Croker described the original October 2019 start date as ‘increasingly unfortunate given economic news and the deadline for Brexit’.
HMRC has announced a postponement of the VAT reverse charge for building and construction services for 12 months, until 1 October 2020, in response to industry representations asking for more time to prepare (see Revenue & Customs Brief 10/2019).
Nevertheless, HMRC stresses it remains committed to the introduction of the reverse charge, which is part of a ‘robust compliance strategy for tackling fraud in the construction sector using tried and tested compliance tools.’ In the meantime, HMRC will ‘work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date’.
Where businesses have already changed their invoices to comply with the planned October 2019 start date, HMRC says it will take this change of date into account ‘where genuine errors have occurred’.
Those businesses who have opted for monthly VAT returns ahead of 1 October in expectation of becoming repayment traders will be able to reverse that option by using the appropriate stagger option on HMRC’s website.
The Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) (Change of Commencement Day) Order, SI 2019/1240, amends the original instrument introducing the VAT reverse charge on construction services, changing the implementation date from 1 October 2019 to 1 October 2020.
The CIOT has welcomed the 12-month delay, which it hopes will lessen the likelihood of disputes between suppliers and customers as to whether or not VAT should be charged. The CIOT’s indirect taxes sub-committee vice-chair, Linda Skilbeck, noted ‘substantial evidence of a lack of awareness of this change, and a lack of preparedness even among those businesses who are aware of it’. The CIOT believes a start date of October 2020 should allow time for HMRC to operate a dedicated information campaign.
Richard Croker, a consultant on construction tax at Pinsent Masons, said it was ‘reassuring that HMRC have listened to industry in postponing this change’. Croker described the original October 2019 start date as ‘increasingly unfortunate given economic news and the deadline for Brexit’.
