New VAT rules coming into effect on 1st October 2019 – are you ready?

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.

This will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).

vat rules 300x182 - New VAT rules coming into effect on 1st October 2019 - are you ready?It comes into effect on 1 October 2019 and means customers 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).

What you need to do to be ready for the start of the
domestic reverse charge

You need to prepare for the 1 October 2019 introduction date by:
• Checking whether the reverse charge affects either your sales, purchases or both.
• Ensuring your accounting systems and software are updated to deal with the reverse charge.
• Considering whether the change will have an impact on your cash flow.
• Ensuring 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.

For further information please do not hesitate to contact one of the team on 01277 314000.