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Domestic reverse charge VAT for construction services – further delay to 2021

The UK Government announced a further delay of the implementation of domestic reverse charge VAT for construction services.  This further delay has been allowed to help businesses overcome the effects of the coronavirus pandemic and give them more time to prepare.

The implementation of domestic reverse charge VAT for construction services has been delayed until 1 March 2021.

Domestic reverse charge VAT for construction services

The domestic reverse charge means the UK customer who gets supplies of construction services must account for the VAT due on these supplies on their VAT return, rather than the UK supplier.  The reason for the domestic reverse charge is to remove the scope for fraudsters to steal the VAT due to HMRC.

This was originally planned to come into force on 1 October 2019 but was delayed for a year in response to industry concerns that some businesses were not ready to implement the changes required.  This has now been further delayed for a period of 5 months from 1 October 2020 until 1 March 2021 due to the impact of the coronavirus pandemic on the construction sector.

The UK Government briefing on the delay to the domestic reverse charge VAT for construction services can be found here.

Full UK Government guidance on the domestic reverse charge VAT for construction services can be found here.

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