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VAT: Domestic Reverse Charge in the Construction Industry: Deferred until 1 October 2020

9 September 2019


In February this year, we covered the Construction Services Domestic Reverse Charge (“CSDRC”) and the rules being introduced for VAT, based on the guidance published by HMRC. Later on, we covered the further guidance that was provided by HMRC. As previously mentioned, the CSDRC was expected to be introduced as of 1st October 2019, which is less than a month away. However, industry representatives raised concerns that businesses were not yet ready for the change.

Thus, a Revenue and Customs Brief (“RCB”) has just been released by HMRC which defers the introduction of the Domestic Reverse Charge for construction services until 1 October 2020.

HMRC remains committed to introducing the change and as the RCB explains, have already increased compliance resource to deal with the change. It also recognises that certain businesses will have already put in place changes that cannot easily be unwound, it has stated that it will take this into account, in light of the implementation date changing, when genuine errors have occurred. In addition, where a business has opted for monthly as opposed to quarterly VAT returns, this can be changed by accessing the HMRC website and altering the VAT stagger.

In light of this extended window being opened to allow you to get your affairs in order in advance of the revised date of 1 October 2020, please contact our VAT team who will be more than happy to advise. The RCB can be found here.