HMRC has announced a one year delay on the implementation of VAT reverse charge to 1 October 2020. Whilst this is good news for construction businesses who were not yet prepared, it may cause additional work for those businesses who were ready to go.
HMRC has said they recognise that some businesses will have changed their invoices already to meet the needs of the reverse charge and cannot change them back in time. Therefore they will take the change in implementation date into account where genuine errors have occurred. This does not mean that businesses can continue to issue such invoices, and steps should be taken to revert to pre-implementation invoicing.
Also, where businesses have already opted for monthly VAT returns, they should reverse this as soon as possible.
Those businesses not yet ready for the original implementation date should now take advantage of the extra time available and consider the software changes required, and extra funding requirements – if applicable.
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The information in this article should not be regarded as financial advice. This is based on our understanding in September 2019. Laws and tax rules may change in the future.