Five month delay to introduction of the Domestic Reverse Charge for VAT
HMRC have announced a further five month delay to the introduction of the Domestic Reverse Charge for VAT, due to the impact of COVID-19.
On Friday 5 June 2020, HMRC issued Revenue and Customs Brief 7 (2020) announcing that the introduction of the Domestic Reverse Charge for construction services will be delayed for a further period of 5 months, until 1 March 2021, due to the impact of COVID-19 on the construction sector.
Whilst the introduction is delayed, HMRC again confirmed they remain committed to the introduction of the reverse charge. In the intervening period, HMRC will focus additional resource on identifying and tackling existing perpetrators of fraud in the sector.
Given the additional delay, it would appear less likely that HMRC will be sympathetic to businesses failing to get ready for the changes, for example by adapting their accounting systems etc. It is therefore important businesses use the additional time to better prepare for the changes as a light touch approach by HMRC is less likely now.
For more information please contact Hydeam Sulton, Head of VAT and Indirect Tax, on 0191 226 8351.