Following the introduction of the domestic reverse charge for construction services on 1 March 2021, many construction businesses will be preparing their first VAT returns under the new regime. From our experience of advising construction clients, what appears to be a simple change is throwing up significant challenges for businesses.
The construction sector has experienced a sustained period of challenge, the weak period of trading many experienced Q2 to Q3 2020 due to Covid has caused finance challenges to continue. Whilst some of these challenges were relieved by good cash management, payment holidays and changes to compliance requirements, the upcoming 2021 Budget announcement and the ongoing Covid problem means now is the time to ensure you are best placed to overcome any impending hurdles.
Important VAT changes are coming to the construction and property sector from 1 March 2021. The Construction Reverse Charge is being introduced, changing who is responsible for accounting for VAT in relation to certain supplies.
But what does this mean? AAB's Alistair Duncan, Indirect Tax specialist at AAB, hosted a Q&A on LinkedIn answering the most important questions surrounding the change. We've summarised the questions and answers below.
2020 will undoubtedly be remembered as the year of ‘unprecedented’ challenges and change, for individuals and businesses across all sectors, particularly in Q1 and the start of Q2.
HMRC have confirmed this morning in Revenue and Customs Brief 7 that the implementation of the Domestic Reverse charge has been delayed for a further 5 months. The new implementation date is 1st of March 2021. Please click to read our previous blog on domestic reverse charge and the HMRC brief published this morning.