The CIS VAT Reverse Charge – VAT’s not going to be the same for Builders from 1st March 2021!

In an attempt to stop fraud in the construction industry, HMRC will be introducing a domestic reverse charge which will take effect from 1st March 2021. This was delayed from October 2020.

The new CIS VAT reverse charge will only apply to certain building and construction services. It will mean that the customer will now be liable to account for the VAT on purchases, rather than the supplier, just as it currently works when dealing with businesses within the EU.

The idea is to limit the amount of VAT paid from business to business, so that fraudsters cannot syphon off the money and not pay it over to the HMRC.

Although on the whole this will not have a negative affect on most businesses, it will affect cash flow, and will of course mean yet more paperwork at a time when small businesses are under pressure already.

This information was accurate as of February 2021.

There is more information about the CIS VAT reverse charge on the HMRC website here.

Please download our full free PDF guide for a full explanation as to the new rules, or get in touch for a no obligation chat.

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