The government has announced a 12-month delay to the introduction of the domestic reverse charge VAT for construction services. Brexit and industry concerns were given as reasons for the postponement.

The domestic reverse charge would mean the UK customer receiving supplies of construction services must account for the VAT due on the supplies on their VAT return rather than the UK supplier. This would therefore remove the scope for fraudsters to steal the VAT due to HMRC.

In a statement, HMRC said that it “remains committed” to introducing the charge. However, in the intervening year HMRC will focus on identifying and tackling existing perpetrators of VAT-related fraud in the industry.

Some businesses may have already changed their invoices to meet the needs of the reverse charge. As a result, they may not be easily changed before the deadline. Where genuine errors have occurred HMRC confirmed that they will take into account change in implementation date. Businesses that have already opted for monthly VAT returns, can use the appropriate stagger option on the HMRC website to reverse it.

HMRC are committed to working closely with the sector. They aim to raise awareness and provide additional guidance to ensure all businesses will be ready for the new date.

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