Understanding The Domestic Reverse Charge
Following two previously announced delays the new Domestic Reverse VAT Charge (DRC) for Building and Construction Services will come into force on 1 March 2021.
HMRC has already published legislation and guidance on this new regime, which will require the recipient rather than the supplier to account for the VAT due on certain construction services.
The DRC must be used for most supplies of building and construction services and applies to standard and reduced-rate VAT services:
– for individuals or businesses who are registered for VAT in the UK
– reported within the Construction Industry Scheme
The DRC applies to a very broad section of businesses involved in property development, even those who may not typically consider themselves to be construction companies. Among those included are construction, alteration, repair, extension, painting and decorating, plus the demolition of buildings, civil engineering and the installation of heating, lighting and air-conditioning. The legislation is designed so that if there is a reverse charge element in a supply then the whole supply will be subject to the domestic reverse charge. Not sure if the DRC applies to your businesses, find out using HMRC’s flowcharts.
If you are unsure as to how to apply the VAT Reverse Charge, this recorded webinar will provide you with more information.
Rest assured, as your accountant, we already have the appropriate measures in place to process reverse charge supplies.
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TOPICS: Business Bounce Back Loans Property Taxes - April 2020 changes landlords need to be aware of Educate the Executor Other Covid-19 Daily Updates:Practice Number: 21331Jacqueline Tetley is licensed and regulated by AAT under licence number 5096.
Practice Number: 21331
Jacqueline Tetley is licensed and regulated by AAT under licence number 5096.