Domestic reverse VAT charge for building and construction services

Domestic reverse VAT charge for building and construction services

HM Revenue and Customs has confirmed that the introduction of the new Domestic Reverse Charge for construction services (DRC) will be further delayed from 1 October 2020 to 1 March 2021.

The DRC was originally due to begin on 1 October 2019 but changed to 1 October 2020. This new delay recognises the impact of Coronavirus on the construction sector.

It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers).

This will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).

What you need to do to be ready for the start of the domestic reverse charge

You need to prepare for the 1 March 2021 introduction date by:

– checking whether the reverse charge affects either your sales, purchases or both

– making sure your accounting systems and software are updated to deal with the reverse charge

– considering whether the change will have an impact on your cashflow

– making sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate

Click here for more information. 

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