A domestic reverse charge means the UK customer who receives supplies of construction services must account for the VAT due on these supplies on their VAT return, rather than the UK supplier.
The scheme was initially due to be introduced in October 2019 but it was deferred initially until October 2020 after industry concerns businesses had not been given suitable time to make the required changes.
To help construction businesses overcome the effects that the coronavirus pandemic has had on them and give them more time to prepare, the introduction of the reverse charge has been delayed for a further 5 months until 1 March 2021.
Businesses providing Construction Services may need to adapt their accounting systems for dealing with VAT and there will be a negative impact on the cash-flows for many affected businesses, as they will no longer receive VAT payments from customers for services where the reverse charge applies.
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