News: VAT Rules Change

Posted on 4th September 2019

VAT Reverse Charge for the Construction Industry

I know this sounds straight out of an episode of “Gladiators” from the 1990s BUT, “Businesses, are you ready?”

If you operate in the construction sector, the VAT rules change from the 1st October 2019. To counter fraud in the construction sector, ‘reverse charge’ provisions are being introduced for supplies between contractors of construction services liable to VAT at either the standard or the reduced rate.

What does this mean?

For the most part, VAT registered contractors charging other contractors for construction services will no longer be required to add VAT to their invoices. Instead they will notify their contractor customer that it is the contractor customer who is liable to account for the VAT on the supply received – there is suggested narrative available for what you might say on your invoices.

Contractors working for other contractors will therefore no longer receive the VAT on the services they supply but will still be paying VAT to suppliers of plant and materials. If all your customers are other construction businesses, it may mean that you become a regular VAT refund case as you will not be collecting and having to pay over the sales VAT yourself. This may adversely impact your cashflow as you will no longer be able to ‘hold’ this money until your normal VAT payment date.

Needless to say, there is more to it than this in particular circumstances.

The three big questions we are starting to help businesses with, and that you should be asking your own business are:

  1. What adjustments do I need to make to my software/bookkeeping to ensure I get my invoices and VAT returns correct?
  2. How will this impact my cashflow?
  3. Do I need to be explaining this to my subcontractors?

In the weeks running up to the 1st October, Richard Place Dobson will be running a workshop to help construction businesses, details will follow on the GDB website. Alternatively, contact Mathew Tyson, Managing Director at Richard Place Dobson, directly on matthew@placedobson.co.uk.

Back to News ›

Testimonials

"As MP for Mid Sussex I believe passionately in the importance of a vibrant local business community in order to create and sustain fantastic opportunities that enable people to meet their responsibilities, prosper and fulfil their potential. I am committed to collaborating with BHBPA and others to be an effective collective voice for Burgess Hill."

Mims Davies MP, Member of Parliament for Mid Sussex

"This association was started with a lot of effort from a few local businessmen and has proved to be a very powerful and useful tool for our business. The BHBPA has influence at the top level; when action is needed, the BHBPA gets it done. We are kept in touch with all that is happening on our doorstep and will often act because of what is published in the weekly emails / newsletters."

Steve Mooney
(Steven Mooney Machinery)

"“I have belonged to this group since I started my own business, Lea Graham Associates, in 1986. The association has been through several incarnations since then, but its most recent one, BHBPA, is by far the best.

It’s much more than just a networking group, although it is supremely good at that too. BHBPA is inclusive and friendly and acts like a mutual-support society. The events are stimulating, worthwhile and often great fun and I believe most members share this opinion.”"

Susan Fleet, Managing Director
(Lea Graham Associates)

"If Carlsberg did networking they would do it the BHBPA way. Each event is packed with great ideas, thought provoking presentations and fun. As a small business we feel supported and part of the community. We have built friendships and business relationships and there is always plenty of advice on hand to benefit us all so don’t hesitate to join whatever the nature of your business. "

Angela Gill, Managing Director
(Bio Productions Ltd)