The VAT domestic reverse charge for construction comes into force today, the 1st March 2021.
Why is the VAT reverse charge for construction services being introduced?
The domestic reverse charge VAT procedure is an anti-fraud measure designed to counter sophisticated criminal attacks on the UK VAT system. It intends to cut down on “missing trader” fraud, where companies receive high net amounts of VAT from their customers but have no intention of paying the VAT to HMRC.
Who does the VAT reverse charge for construction services apply to?
It applies only to VAT-registered businesses who are supplying/receiving services that are reported under CIS.
In other words, it applies to services supplied between the majority of construction subcontractors and contractors in the UK.