Posted 23/02/2021 by Amy Patterson
A quick reminder that new VAT rules for building contractors and sub-contractors will come into effect from 1 March 2021.
This means that from 1 March 2021, sub-contractors will no longer add VAT to their supplies to most building customers, instead, contractors will be obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers. This is known as the Domestic Reverse Charge. However, there is no loss of cashflow as the deemed output VAT can be deducted as input VAT subject to any existing restrictions; in this way the two entries on VAT returns cancel each other out.
This change will mean you that contractors will have to alter the way that supplies from sub-contractors are treated by their accounting software.
HMRC’s guidance states that, for invoices issued for specified supplies that become liable to the reverse charge, the VAT treatment for invoices with a tax point:
Did you know we are platinum partner to Xero and we are offering exclusive access to their Manage Domestic Reverse Charge VAT and CIS with Xero webinar. Register here you place for Feb 26 2021 at 10:00 AM.
Please remember we have a dedicated team on-hand is discuss this with you and help you prepare for the changes. Get in touch with your usual Farnell Clarke contact who can help walk you through the changes. Alternatively, call 01603 766078 or email email@example.com.Back to Construction Industry Scheme