The domestic reverse charge VAT for construction services was due to take effect from 1 October 2019. However, it was announced in Revenue and Customs Brief 10 (2019) that the start date is to be delayed by 12 months until 1 October 2020.
Under the domestic reverse charge, it is UK customers who receive supplies of construction services who must account for the VAT due on these supplies on their VAT return rather than the UK supplier.
The measure is an anti-avoidance measure which removes the scope for fraudsters to steal the VAT due to HMRC.
The start date was put back amid concerns raised by industry representatives that some businesses in the construction sector are not ready to implement the charge. The delay will give businesses more time to prepare. Delaying the introduction until October 2020 will also mean that the changes will not coincide with Brexit.
HMRC state in the Business Brief that they recognise that some businesses will have already changed their invoices to meet the needs of the reverse charge and will not easily be able to change them back by 1 October 2019. Where genuine errors occur as a result, HMRC will take into account the fact that the implementation date has changed.
Businesses which opted for monthly VAT returns ahead of the original 1 October 2019 implementation date can reverse this using the appropriate stagger option on the HMRC website.
The Revenue and Customs Brief is available on the Gov.uk website at www. gov.uk/government/publications/revenue- and-customs-brief-10-2019-domestic- reverse-charge-vat-for-construction- services-delay-in-implementation.