HMRC announced late Friday afternoon that the VAT Domestic Reverse Charge will now be delayed until October 2020 because businesses are not ready to implement it!! The industry will welcome the delay.
The move follows intense pressure from the construction industry associations which warned that companies were not ready for the change, or the impact it would have on business finances, and the industry would need more time to prepare for the significant changes.
In a briefing note, HMRC said “Industry representatives have raised concerns that some businesses in the construction sector are not ready to implement the VAT domestic reverse charge for building and construction on 1st October 2019.
“To help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 1st October 2020. This will also avoid the changes coinciding with Brexit.
“HMRC remains committed to the introduction of the reverse charge and has already increased compliance resource. It has put in place a robust compliance strategy for tackling fraud in the construction sector using tried and tested compliance tools.
“In the intervening year, HMRC will focus additional resource on identifying and tackling existing perpetrators of the fraud. It will also work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date.
“HRMC recognises that some businesses will have already changed their invoices to meet the needs of the reverse charge and cannot easily change them back in time. Where genuine errors have occurred, HMRC will take into account the fact that the implementation date has changed.
“Some businesses may have opted for monthly VAT returns ahead of the 1 October 2019 implementation date which they can reverse by using the appropriate stagger option on the HMRC website.”
To read the full details and notification from HMRC please click here.