The UK’s construction industry will have to handle and pay VAT differently from 1 March 2021 – unless there’s another last-minute Government U-turn!

This is when the VAT Domestic Reverse Charge for Building and Construction Services, to use its full name, will finally take effect at the third time of asking. In this article, we’ll refer to it simply as the ‘reverse charge’.

The reverse charge affects VAT-registered businesses that operate under the Construction Industry Scheme (CIS). These are usually businesses who either take on contracts or subcontract others within a typical supply chain. 

The reverse charge was originally due to kick in from 1 October 2019, but that was put on hold for 12 months to give businesses more time to prepare for the UK’s exit from the EU.

Then, on 5 June 2020, after many construction sites closed down during the first national lockdown in April 2020, the introduction date of the reverse charge was put back by another five months – from 1 October 2020 to 1 March 2021.

Haleys Business Advisors specialise in the construction Industry sector.

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