VAT construction industry scheme delayed again

Double delay. The introduction of the VAT reverse charge for the construction industry, already put back by one year to 1 October 2020, has been further delayed until 1 March 2021 because of the coronavirus crisis. The construction industry, like many others, has been badly affected by the lockdown and the scheme would affect cash flow at a time when businesses are trying to recover.

Next year. When the reverse charge is eventually introduced it will only apply to business-to-business transactions where each party is a UK business within the construction industry. Like the existing reverse charge scheme (for services supplied to businesses in the EU), the recipient of the construction services, not the supplier, will be required to account for VAT on purchases. They can then reclaim the VAT they have charged themselves, subject to the normal conditions.

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