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VAT Reverse charge for Building and Construction Services

Are you in the building or Construction industry? From 1st October 2019, a new VAT reverse charge will come into force on certain building and construction services.

This measure will affect VAT registered suppliers and customers of specified services where the payments are reportable for CIS.

The implementation of the reverse charge will mean that the customer receiving the supply must account for the output VAT instead of the supplier. This will result in customers only paying the net amount of the invoice and recording both the output and input VAT on their own VAT return, essentially creating a nil effect. In this case, the supplier will not receive the VAT from their invoice and will have nothing to report.

One of the exclusions to the reverse charge will be if the customer is the ‘end user’ of the supply (for example, they will use the supply themselves rather than using it within their services). If this is the case, normal VAT rules will still apply.

While this does not cause too many additional VAT reporting duties, it will however provide further administrative tasks including:

  • Contacting customers to find out whether they are the ‘end user’ of the supply.
  • Disclosing on the invoice if the reverse charge applies and that the customer is required to account for the VAT.

HMRC’s introduction of the reverse charge is an attempt to combat the issue of ‘missing trader’ fraud – a situation involving traders deliberately failing to pay its VAT liability for supplies made.

This ruling will therefore ensure that the VAT due is recovered by HMRC on supplies, whilst bearing no financial impact on the customer.

If your business is VAT and CIS registered and you need further guidance then please give us a call. We can help you with Accountancy, Tax, VAT and CIS queries as well as providing bookkeeping and payroll services. To find out more about Haines Watts visit our website here.


Our office is located on the Diss Business Park. Drop in and see us or give us a call on 01379 640555.

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