VAT CHANGE IN CONSTRUCTION INDUSTRY 1ST MARCH

VAT CHANGES FOR THE CONSTRUCTION INDUSTRY

From 1st March 2021, VAT-registered subcontractors will no longer charge VAT on certain construction services to another VAT-registered business. Instead, the customer will ‘self-account’ for any VAT due – this is known as the Reverse Charge.

 
The Reverse Charge is being introduced in the construction industry to tackle ‘missing trader fraud’. Missing trader fraud occurs when construction companies are formed and deliver services. Rather than pay the output VAT charged on their sales to HM Revenue and Customs (HMRC), they soon close the business and disappear with the VAT they collected from their customers.
 
The Reverse Charge rules will mean that the VAT will no longer flow around the supply chain and is not paid until it reaches an ‘end user’ or private individual.  
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Image by Adobe Stock from stock.adobe.com -- DATE OF ATTRIBUTION: 30/11/2024