Tuesday 18 June 2019
VAT: Domestic Reverse Charge for building and construction services
With effect from 1 October 2019, the VAT position will change as far as transactions concerning certain supplies of construction services is concerned.
From this date, the customer will account for the VAT by doing the reverse charge on his own VAT return. This means that the supplier neither charges VAT to nor collects VAT from his customer. The reverse charge will apply to the following transactions:
• The legislation refers to ‘specified services’ but these do not apply to services supplied to non-construction businesses, such as a high street retailer having his premises improved or any other end user customer or building owner;
• The reverse charge will also apply to any goods supplied by the builder as part of his work;
• Supplies between landlords and tenants are excluded from the reverse charge as well as supplies involving connected parties. In such cases, the supplier will continue to charge VAT as happens now;
• The reverse charge will be based on the VAT rate applying for the work in question, but only supplies subject to either 5% or 20% VAT i.e. excluding zero-rated sales.
Further and full information is available on HMRC website: