HMRC have announced a delay to the introduction of the domestic reverse charge for construction services until 1 March 2021 due to the impact of the Coronavirus on the construction sector. Additionally, they have made a change to the exclusion requirements of end-users and intermediaries.
The proposed new and highly administratively complex CIS Domestic Reverse Charge VAT regime had originally been due to commence in October 2019. The start date was then moved to October 2020 due to a combination of a lack of readiness by the industry and software companies, coupled with the fact Brexit exerted a heavy toll on HMRC's resources. The reverse charge is important in combating supply chain VAT fraud in the industry. It remains to be seen whether the industry will able to cope with the changes by March 2021.
In addition, Brief 7 makes an amendment to the legislation, making it a requirement that in order for businesses to be excluded from the reverse charge because they are end-users or intermediary suppliers, they must inform their sub-contractors in writing that they are end-users or intermediary suppliers.
CIS: Construction Industry reverse charge
What is the CIS reverse charge? How do you account for VAT? Can you still cash account for VAT? What administrative changes do I need in order to operate the reverse charge?