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VAT REVERSE CHARGE! WHAT IS IT?

LETS BE READY FOR THE CHANGE!

There will be a change soon to the way VAT is collected in the building and construction sector. UAS has collated some useful information below to help those business’s in the industry.
 
 
The domestic reverse charge (referred to as the reverse charge) is a major change to the way VAT is collected in the building and construction industry.
 
It comes into effect on 1 March 2021 and means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier.
 
It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers).
 
This will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).
 
What you need to do to be ready for the start of the domestic reverse charge
You need to prepare for the 1 March 2021 introduction date by:
 
checking whether the reverse charge affects either your sales, purchases or both
making sure your accounting systems and software are updated to deal with the reverse charge
considering whether the change will have an impact on your cashflow
making sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate
 
What contractors need to do
If you’re a contractor you’ll also need to review all your contracts with sub-contractors, to decide if the reverse charge will apply to the services you receive under your contracts. You’ll need to notify your suppliers if it will.
 
What sub-contractors need to do
If you’re a sub-contractor you’ll also need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end user or intermediary supplier.
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