Reminder: VAT reverse charge for construction sector to take effect on 1 March 2021

Businesses operating in the construction industry should be reminded that HMRC’s VAT domestic reverse charge is finally due to come into force on 1 March 2021, having been delayed twice previously.

Originally planned to come into effect on 1 October 2019, the introduction of the reverse charge was postponed for a year and later pushed back further to March 2021 as a result of the COVID-19 crisis.

As a reminder, the reverse charge represents a change in the way VAT is accounted for in the construction industry on certain supplies, in HMRC’s attempt to combat fraud. The new regulations mean that VAT-registered subcontractors who perform qualifying ‘construction operations’ will not charge VAT to the main contractor for any services rendered; the main contractor will be required to pay the VAT over to HMRC on its behalf instead.

Our recent blog, published in October, provides more detail on the reverse charge and what affected businesses will need to do from 1 March onwards. Please click here to read our blog in full.

Register for a free webinar taking place on 1 March, run by Xero, to help you understand the VAT domestic reverse charge changes, as well as tips on how to prepare. Register for the event here.

If you have any queries on how the VAT reverse charge may impact your business or how to prepare ahead of the change, please don’t hesitate to get in touch with our team via email at enquiries@pmm.co.uk and we’ll direct you to the best person to support you.

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