From 1 March 2021 HMRC will finally introduce the domestic reverse charge. The charge may be relevant for businesses supplying or purchasing building and construction services.
If supplying services, you will need to apply the reverse charge if the following statements are true:
- your customer is registered for VAT in the UK,
- payment for the supply is reported within the Construction Industry Scheme (CIS),
- the services you supply are standard or reduced rated,
- you are not an employment business, supplying either staff or workers, or both,
- your customer has not given written confirmation that they are an end user or intermediary supplier.
If purchasing building and construction services, you will need to apply the reverse charge if the following statements are true:
- payment for the supply is reported within the Construction Industry Scheme (CIS),
- the supply is standard or reduced rated,
- you are not hiring either staff or workers, or both,
- you are not using the end user or intermediary exclusions.
HMRC have confirmed that they will apply a “light touch” in dealing with any errors made in the first 6 months of the new legislation, to allow for difficulties faced while implementing the scheme.
For additional information, please contact Paul Webb: hello@dixcartuk.com.
