Contractors operating CIS – new VAT reverse charge on building and construction services
20 August 2019
Are you a contractor or an employment business operating the Construction Industry Scheme (CIS)? If so, you need to know that the new VAT reverse charge measure comes into effect on 1 October 2019.
VAT reverse charge for construction services - webinar
HMRC is running a webinar on Monday 2 September and Wednesday 18 September.
If you’re in the Construction Industry Scheme, find out if the charge affects you, how it may impact your cash flow and how to prepare for the changes. Register online here.
The key aspects of the reverse charge are:
it will apply to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services;
the scope of supplies affected is closely aligned to the supplies required to be reported under the CIS, but does not include supplies of staff or workers by employment businesses;
the legislation introduces the concept of “end users” and “intermediary suppliers”. This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and as such are excluded from the scope of the reverse charge if they receive such supplies. Examples include landlords, tenants and property developers.
Further information on the scope of the reverse charge and how it will operate can be found in this guidance note, published in June 2019. The guidance will continue to be updated, as necessary.