8th June 2020 update: Due to the impact of the Coronavirus on the construction sector, the UK VAT domestic reverse charge, that was due to be introduced with effect from 1 October 2020, has been delayed further until March 2021.

After intense lobbying from the construction industry, the government has agreed to a one-year delay on the implementation of the Domestic Reverse Charge (DRC), which was due to come into force just 3 weeks from now, on 1st October 2019.

Disruptive timescales

Many argued that sufficient time and resources hadn’t been provided to facilitate the implementation of this significant change which is expected to have reverberations throughout the industry.

Given the uncertainty of Brexit and its potential impact on the industry, coupled with the very real potential of a ‘no-deal’ scenario, industry experts warned the timing would have had a disruptive and potentially detrimental impact on the wider construction industry.

Committed to the implementation of DRC

HMRC have confirmed they remain committed to the implementation of the DRC, and it is still set to significantly impact most businesses operating in the construction industry, but not until 1st October 2020.

A measure intended to clamp down on perceived tax evasion within the construction industry, the DRC shifts the responsibility of VAT payment from the supplier to the customer, who will have to pay the VAT due directly to HMRC, reported through the Construction Industry Scheme (CIS).

Preparing for the future

The extension will grant contractors valuable time to prepare and consider how it will affect them one year from now, taking the necessary steps to ensure a smooth transition to the new system.

To ensure you keep up to date with any changes relating to the DRC, or changes to VAT procedures more generally, you can update your marketing preferences here, which will ensure you will be the first to receive any updates that are issued in relation to VAT.

We have extensive experience in the construction industry and will ensure you’re kept up to date with any further changes, helping to implement solutions long before any changes come into force, ensuring you’re suitably prepared and well informed.

For any further information, please get in touch today.