VAT Domestic Reverse Charge postponed, for the second time, until March 2021

8th June 2020

The Domestic Reverse Charge for VAT, initially due to be implemented in October 2019 has been postponed for the second time. The new implementation date is now 1 March 2021. The second delay to the scheme is in response to the current coronavirus pandemic.

Construction

The domestic reverse charge is a major change to the way VAT is collected in the building and construction industry. Once in force, the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier.

HMRC has acknowledged that this change will come with some complications and have confirmed there will be a ‘light touch’ in dealing with any errors made in the first 6 months, as long as you are ‘trying to comply with the new legislation and have acted in good faith’.

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 cash flow

  • making sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate

For more information on the changes, take a read of our blog for a full breakdown of how businesses can fully prepare for the changes or contact us on 01926 422292.