CIS Construction Industry VAT Reverse Charge

The CIS VAT domestic reverse charge measure will apply to supplies of construction work from 1 March 2021. The measure was due to commence in October 2019 and has been delayed twice due to Brexit and the Coronavirus.

The CIS VAT domestic reverse charge measure will apply to supplies of construction work from 1 March 2021. The measure was due to commence in October 2019 and has been delayed twice due to Brexit and the Coronavirus.

Where it applies the effect of the scheme is to take VAT payments out of the transaction so the provider of the goods or services cannot disappear or fail to pay the VAT due.

Instead, the purchaser of the goods or services within the CIS supply chain accounts for the VAT (output tax) due to HMRC rather than the provider of the goods or services. The purchaser does this by declaring the VAT due as output tax on its VAT return. This can also be reclaimed as input tax subject to the normal rules – for most transactions the VAT is simply netted off.

Please click the link below for HMRCs detailed information regarding the changes:

How to use the VAT reverse charge if you supply building and construction services
https://www.gov.uk/guidance/how-to-use-the-vat-reverse-charge-if-you-supply-building-and-construction-services

VAT reverse charge technical guide
https://www.gov.uk/guidance/vat-reverse-charge-technical-guide

Suppliers Flowchart
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/878587/Annex_1_-_VAT_domestic_reverse_charge_for_building_and_construction_services.pdf

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