The VAT domestic reverse charge for construction is changing in October - here's what you need to know

By Colin Laidlaw and Rupert Moyle 2019-04-04T06:00:00

Colin Laidlaw and Rupert Moyle explain the new VAT domestic reverse charge for construction services

A significant change to how contractors in the supply chain account for VAT comes into effect on 1 October. The new rules remove the current requirement for VAT to be charged on sales invoices from one contractor to another.

Why is this change happening?

The most common fraud in the building industry from HMRC’s perspective is missing trader fraud committed by subcontractors that provide labour for construction services. HMRC estimates that more than £100m a year is lost by this and similar types of fraud and current efforts to protect revenue, such as seeking security deposits in advance, have not been successful.

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