Budget 2018: the chancellor has announced VAT reverse charge anti-avoidance changes to remove unintended consequences for businesses trading below the VAT threshold.

From Royal Assent of the Finance Bill 2019, the rules on the Reverse Charge for missing trader fraud will be changed, partly in preparation for the proposed introduction of a reverse charge for the construction industy.

  • Businesses trading in certain sectors must operate the reverse charge to protect the revenue from VAT fraud.
  • The reverse charge rules currently treat the business as making a self-supply but the rules do not discount the onward supply that business may make. This leads to effective double counting for the VAT Registration threshold.
  • The changes will enable this double counting to be corrected in appropriate cases. 

Useful links:

Budget 2018 live highlights

Budget 2018 summary

External link

HMRC: VAT reverse charge anti-avoidance changes