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.
Despite already being delayed previously, 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 March 2021.
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.
There will also be an amendment to the original legislation, which was laid in April 2019, to make it a requirement that for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their sub-contractors in writing that they are end users or intermediary suppliers.
If you would like to discuss the implications of the delay to the construction industry reverse charge further, please get in touch.