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Reverse Charge VAT for the Construction Industry

June 2019

There is an important change that you need to be aware of, coming into effect on 1st October 2019. This change will affect any business that is CIS and VAT registered or that pays suppliers that are CIS and VAT registered.

Construction Person Writing on Paper on Top of Table

The new legislation is aimed at shifting the VAT liability on building and other construction services from the supplier to the customer. This will be achieved by reverse charge VAT. Put simply, when there is an invoice raised between two businesses that are both within the scope of CIS and VAT, there will be no VAT added to the service and no VAT will be physically paid.

What is reverse charge VAT?

The concept of reverse charge VAT is nothing new, it currently applies where a business purchases goods from another EU country for example. The way it works is simple – instead of the supplier (seller) charging the customer VAT, the customer charges itself VAT and then, because it has paid VAT as a purchaser, reclaims it the usual way.

What do I need to do?

If you have any questions or need any further information, please get in touch with your Client Manager who will be more than happy to talk you through what you need to do to prepare for this change.

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