Reverse VAT introduced on 1 March

Despite efforts from across the industry over the last month, the Reverse Charge VAT has now been introduced, effective 1 March 2021. This is a new way of collecting VAT from businesses that provide construction services within the scope of the CIS (Construction Industry Scheme), in an attempt to ensure the Government is recovering the correct amount of VAT from the construction sector. This means that VAT will no longer be paid to businesses in the supply chain for providing construction services unless they are providing those services directly to an End User.

We would like to thank members who supported the #StopReverseVAT campaign, which reached over 2 million social media users during February and stands as a great example of the industry coming together.

Now that the legislation has been introduced, RIDBA recommends looking at the Practical Guide from Build UK to ensure you understand how Reverse VAT will affect your business. Members can also refer to this checklist to ensure you have taken the necessary actions, including updating your invoices with the required information.

HMRC has confirmed it will ‘apply a light touch’ in dealing with any errors over the next six months, provided that companies can demonstrate they have tried to comply and acted in good faith.