In response to HMRC’S long-standing concerns about ‘missing-trader’ VAT fraud within the construction industry, a new measure will be introduced on 1 October 2019.
What are the new changes?
Under the new rules, specified construction services will now be subject to reverse charging. This means that instead of the supplier charging and recovering VAT, the receiver or end-user will now be responsible for accounting for VAT transactions thereby reducing the possibility of ‘missing trader’ fraud
Who will it effect?
The changes apply to specified services supplied between VAT registered businesses. The new rules will also apply to goods, where those goods are provided alongside specified services. Whilst there are some exclusions, such as architects and surveying, under the new system the changes may have a significant impact on a fairly wide range of businesses, even when construction is not the main function.
Implementation of the rules may affect some businesses’ cashflow and any current projects may be subject to VAT splitting if continuing after 1 October 2019.
How should my business prepare?
It is important to discuss this with your accountant. If do not have an accountant we would be happy to recommend one.