Changes in VAT for Contractors and Subcontractors

Confused by the new CIS reverse charge VAT rules that come into effect from 1 October 2019, then HMRC have issued further guidance at https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services#overview.

The basics are as from 1 October 2019 if you are a VAT registered subcontractor working for a contractor you will no longer be paid for the VAT element of your invoice and pay it over to HMRC. The customer will need to do this for you.

You will need to verify your customer is VAT registered and make a note on the invoice to make it clear that the domestic reverse charge applies and that the customer is required to account for the VAT.

Practically the software you are using should account for this for you with a different tax code although we are awaiting further details from the software providers.

If you are working on Zero rate new builds the rules will not apply.

Worried about how your cash flow will be affected when the new rules come in, HMRC are suggesting you change to monthly VAT returns or contact their business support services.

Still confused get in contact with your local office and we can help you be ready for the change.

https://www.whitingsllp.co.uk/about-us/contact-us/

Disclaimer - All information in this post was correct at time of writing.