From 1 October 2019, reverse charge VAT rules will come into effect. This new tax regime will mean that a customer receiving services will have to pay any VAT due directly to HMRC instead of paying it through the supplier’s invoice. Under the current system, the supplier would pay the VAT to the HMRC at a later date.
  • It will apply to you if you work for a Main Contractor or anyone that sells on your work as part of the larger contract for construction services
  • It will also apply to you if you pay VAT-registered subcontractors, who will have to ‘reverse charge’ you, rather than you paying them VAT

The switch over date is 1 October 2019. Invoices dated up till 30 September 2019 will request VAT and can be paid with VAT. Invoices dated on 1 October 2019 and after will not show VAT in the amount payable columns.

Liz Bridge, Secretary to the Joint Taxation Committee has produced detailed advice and guidance, including a letter template that you can send to sub-contractors.
You can also find out about reverse charge VAT and what you need to do next, in the short video below.