Government delays introduction of VAT reverse charge!
The controversial introduction of the VAT reverse charge in the construction sector has been postponed by a year and will now take place on 1 October 2020, following concerns that the industry wasn’t ready for this monumental change.
The new VAT reverse charge had been due to come into force on 1 October this year, but having been informed by industry bodies that this would cause chaos, the Government has relented and provided a 12-month extension.
HM Revenue & Customs has said it “remains committed to the introduction of the reverse charge and has already increased compliance resource”.
From October 2020, it will become the responsibility of the contractors supplying construction services who are deemed to be an end user to pay over the VAT that would have previously been charged and accounted for by their sub-contractors.
The regime affects all VAT registered contractors and sub-contractors supplying and receiving services covered by the construction industry scheme, which are liable for VAT at the standard or reduced rate.
Supplies which will be affected by the reverse charge include, but are not limited to:
- constructing, altering, repairing, extending, demolishing or dismantling buildings including walls roadworks railways aircraft runways and harbours.
- installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building and even the internal cleaning of buildings and structures, so far as carried out in the course of their construction etc.
- the painting or decorating of the inside or the external surfaces of any building or structure is included.
The VAT reverse charge also covers materials supplied with these services.
The rules concerning the VAT liability of construction services are complex and will, from October 2020, effectively be determined for the entire supply chain of contractors by the final contractor in the chain.
Contractors and sub-contractors further down the chain of supply will lose the cash flow advantage gained from being paid before having to account for VAT on a VAT return, so they should prepare themselves for this.
Although there is now a 12-month delay, it is still essential that those in the industry begin to take steps now to prepare themselves for the changes in 2020.
- Countdown to the 31 January Self-Assessment Tax Return deadline begins
- Grant scheme opportunities for electric vehicle charging infrastructure at work
- Spanish holiday home owners cautioned over post-Brexit tax impact
- Businesses and contractors offered clarity on IR35
- Pension holders to be refunded £54 million of overpaid tax
- Newly cohabiting parents warned over new tax charge
- HMRC trialling self-assessment checks to help local authorities to recover council tax
- Overseas employees potentially face double NICs liability following a no-deal Brexit
- New figures show a sharp increase in Inheritance Tax (IHT) receipts
- Non-VAT-registered businesses need EORI number to trade with EU customers and suppliers post-Brexit
- 25,000 companies receive penalties for the late filing of accounts in just one month
- HM Revenue & Customs has started carrying out PAYE tax investigations remotely
- Wages rise at the fastest rate in a decade
- Renovated homes that have been empty for two years can qualify for a reduced rate of VAT
- Government delays introduction of VAT reverse charge!
- Making a voluntary disclosure to HMRC
- MTD for VAT filing deadline missed by one in ten businesses
- Boots, Asda and Specsavers push back against business rates
- Half of all SMEs make VAT return mistakes
- Tax investigations reap in £13 billion for the treasury
- How to tell if an email is fraudulent
- Government’s draft IR35 legislation contains important changes
- Construction businesses only have weeks left to prepare for the VAT reverse charge
- HMRC outlines changes to Capital Gains Tax treatment on second homes
- Summer childcare costs cooldown with Tax-Free Childcare
- Employment Allowance to be restricted from next year
- Principal Private Residence Relief and Lettings Relief changes due in April 2020
- New figures show that a quarter of estates paying Inheritance Tax (IHT) are investigated by HMRC
- Wealthiest UK families save nearly £700 million a year in Inheritance Tax
- Taxpayers’ bills delayed by payment on account errors
- SMEs unaware of £1 million annual investment allowance
- Businesses encouraged to increase readiness for no-deal Brexit
- Value of UK SMEs reach £3 trillion
- More than 150 chief financial officers and senior finance executives personally fined by HMRC last year
- Remember to pay the annual data protection charge
- Incorporation no longer automatically resets the two year requirement for sole traders
- Government confirms that HMRC will get a higher priority when firms go bust
- MTD for VAT - relaxation on posting supplier statements
- Significant lack of awareness around gifting rules for IHT
- EIS and SEIS tax relief funding passes £2.1 billion
- New code launched to help protect victims of sophisticated banking fraud
- Revenue tests new trigger to increase the accuracy of PAYE codes
- Pass on up to £950,000 tax-free in 2019-20
- Beware the Employer Compliance Check Questionnaire
- Employers must comply with new payslip rules
- Additional year to prepare for Making Tax Digital for taxes other than VAT
- IR35: off-payroll working rules set to change next year
- Registering for Making Tax Digital for VAT takes seven days, warns HM Revenue & Customs
- Are you registered for Making Tax Digital yet?
- ITV presenter Lorraine Kelly wins important IR35 appeal
- UK SMEs hit by £17.4 billion cybercrime bill in 2018
- Tax-free HMRC scheme assists families with childcare costs
- Invoice fraud cost UK firms £93 million last year
- Businesses get to grips with new employment costs
- Spring Statement 2019
- National Living Wage to rise next month
- Are you making full use of the generous R&D relief scheme?
- Tribunal finds in favour of Middlesbrough FC in low pay claim
- Make the grandest romantic gesture and reduce your tax bill
- New advisory fuel rates for company car users
- Delay in issuing Self-Assessment penalty notifications
- Making Tax Digital productivity boost expected to be worth billions to UK SMEs
- Automatic Enrolment contributions to increase
- HM Revenue & Customs drops insistence that all company directors must submit tax returns
- Late payers to be flagged up to businesses under new proposals
- Just over half of businesses are prepared for Making Tax Digital
- Entrepreneurs’ Relief changes fail to meet up to the test
- Payroll sector prepares for key changes in 2019/20
- Taxpayers treated unfairly by HMRC, says House of Lords report
- Taxpayers offered online tool to assess their self-assessment requirement
- Tax rates rise twice as fast in the UK than the international average
- An end to the Entrepreneurs’ Relief ‘dilutions dilemma’?
- Brexit uncertainty sends small business confidence to a seven-year low
- Debt recovery costs small businesses an average of £9,000
- Smaller estates should not have to file IHT paperwork, says Office for Tax Simplification
- Big increase in P2P lending
- 180,500 first-time buyers benefit from relief on Stamp Duty Land Tax (SDLT)
- Italian e-invoicing requirements make Making Tax Digital look like a walk in the park
- House of Lords calls for a delay to Making Tax Digital
- UK takes second spot for tax compliance in G20
- Unwrapping Christmas tax gifts
- National Living Wage to rise in April 2019
- Entrepreneurs’ Relief rules to be tightened
- Research reveals Inheritance Tax hotspots across the UK
- R&D Tax Credit system to be reviewed in light of fraudulent claims
- HM Revenue & Customs to review and rework some 2016-17 self-assessment tax returns following error
- Payee names to be required for bank transfers in effort to combat fraud and errors
- Public pilot of Making Tax Digital for VAT opens
- Autumn Budget 2018
- Budget date 2018 announced, with half the usual notice
- Employment claims from contractors brought within IR35 expected after HMRC settlement
- Just eight per cent of business loan applications successful with one high street bank
- Government backed tax-free savings plan to help savers earn 50p on every £1
- HMRC investigates estate valuations as part of IHT campaign
- Micro businesses bear the brunt of late payments
- HMRC finally launches MTD communications plan and simplified guidance
- Workers miss out on £15.6 million in pay through minimum wage breaches
- CIOT reports increase in R40 refund errors
- Property investments once again hit by new tax rules
- HMRC releases new advisory fuel rates for company car users