Members need to prepare themselves for the upcoming reverse charge VAT. This will see VAT being paid between construction firms ‘reversed charged’ which will have consequences for your cashflow and accounting systems.
The first public guidance has now been released and is available at https://www.gov.uk/government/publications/vat-reverse-charge-for-building-and-construction-services-guidance-note/guidance-note We urge all members to download a copy and take the time to read it. There will be lots more literature including example letters for subcontractors and example invoices as we approach the start date. Companies must not start reverse charging before the start date.
Reverse charge VAT will involve some decision making before an invoice is sent to a customer based on the nature of the work done and accounts departments will need to know whether the customer is VAT registered and whether the customer is CIS registered.
JTC has created a flow chart, which is similar to what members will use daily after October 2019.
Think about collecting your customers VAT registration numbers and CIS UTR now for projects that will run over into autumn 2019. There will be far more guidance and help as we get closer to the start – just think and be aware that change is happening.