VAT Reverse Charge Delay until October 2020

Further to our article earlier this year reporting on the new legislative changes to how VAT will be charged for construction services from 1 October 2019 (see here), HMRC have now announced that this will be postponed for 12 months, up to 1 October 2020.

This delay is in response to requests from several construction industry groups, including the Federation of Master Builders, for a postponement on the basis that some businesses would not be ready to comply with the new rules ready for 1 October 2019, due to the number of changes needed to accounting systems and working practices.  It will also avoid any potential clash with Brexit, which may cause difficulties for construction businesses in and around October 2019.

HMRC have confirmed that they “remain committed to the introduction of the reverse charge” and will work closely with the construction sector to provide guidance and support to ensure all businesses will be ready in good time for 1 October 2020.

As before, it would therefore be prudent for those registered for CIS and VAT to seek advice from their accountants as to how this will impact on their cash flow and invoicing procedures.

Otherwise, watch this space!