- 29th August 2019
- Posted by: team-glow
- Category: VAT
Are you ready for the Domestic Reverse Charge VAT for Construction Services?
Ahead of the new legislation, businesses in the construction industry should check with existing customers and contractors on their VAT registration and CIS status, if an end user the reverse charge will not be applicable (end users are individuals/businesses who receive construction/building services, but do not pass on those services.) From 1 October 2019, those businesses which are VAT registered and whose payments are reported via the Construction Industry Scheme, will be subject to the CIS/VAT domestic reverse charge legislation. This new legislation only applies if both the contractor and subcontractor are VAT registered, regardless of whether the contractor/subcontractor has gross status. This is because the domestic reverse charge is based on whether supplies are CIS specified, not on the CIS status of the contractor/subcontractor. HMRC has implemented this procedure to combat missing trader fraud, which is prevalent across several industries. As HMRC has implemented such procedures to combat this problem across other industries, it has now found its way within the construction industry.
Essentially, missing trader fraud, is a simplified version of ‘carousel fraud’ (the exploitation of importing VAT free goods from one country, then selling to several other companies). However, whereas carousel fraud is an international problem, missing trader fraud is a UK one.
Shenward are a leading firm of independent Chartered Accountants & Business Advisors, we have a lot of experience in providing detailed advice on personal finances or detailed financial advice about your business. Throughout these challenging economic times the most up-to-date financial advice is needed to understand how the latest regulations affect you and your business. Shenward provide a range of accounting, auditing, tax, advisory and HR & payroll services that have been specifically designed to help our clients meet challenges and maximise opportunities.
If you are running a business, the new legislation coming into force on the 1stOctober could have an impact on business cashflow, so appropriate actions should be put in place to mitigate any risks. At Shenward we can also take a look at your software and ensure it is appropriate and we are able to deal with the up coming changes
How to get help
For further information, please contact us to ensure you fully understand the upcoming changes and how we can support you.