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Changes to the VAT Reverse Charge for the Construction Industry Scheme

17.02.2021

Business

From 1 March 2021, VAT-registered subcontractors will no longer charge VAT on certain construction services to another VAT-registered business.
 
Instead, the customer will ‘self-account’ for any VAT due, this is known as the Reverse Charge.
 
"This change affects both contractors and subcontractors that operate under the construction
industry scheme (CIS) and supply certain kinds of construction services in the UK".
 
The reverse charge puts the onus on the customer who receives a construction service to account for the supplier’s output VAT and to pay this output VAT to HMRC, instead of the supplier.
 
The aim - to reduce cases of VAT fraud that have been reported in the building sector, where suppliers have charged their customers for VAT but kept the money for themselves.
 

VAT Reverse Charge - Under the new rules

 

From 1 March 2021

 

Switching to the new VAT regime


​Impact on cashflow

 

How can we help?
 

Contact us on 01223 810100 - if the changes to the VAT Reverse Charge affects your company.

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