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:
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 email@example.com.
"“Sutton Winson have been members of the BHBPA for around 7 years. We have found it a great way to keep in touch with Burgess Hill businesses and to meet with likeminded people. It’s not just another “networking” group, as it tackles the real issues and gets things done”"
"I am delighted to have a long-standing relationship with the BHBPA. Since its foundation the Association has gone from strength to strength and there is no doubt that it has brought huge benefits to its members and the business community as a whole through the partnerships it has formed with the local authorities, Sussex Police and local organisations. It is paramount that Burgess Hill businesses have an effective collective voice."
"“I can’t speak highly enough of the BHBPA. As a small local business we feel very much part of a community and thoroughly enjoy the annual exhibition and meetings throughout the year. Over the years we have built fantastic working relationships with many BHBPA members and every meeting and event offers us opportunities to work with more. This is networking at its best! ” "
"“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.”"