On the 1st March this year, the UK VAT ‘reverse charge’ will apply to VAT-registered businesses in the Construction Industry Scheme (CIS).
It applies to the following building and construction services at either standard or reduced rate VAT:
• construction, alteration, repair, extension, demolition, or dismantling of buildings or structures (whether permanent or not), including offshore installations
• construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including (in particular) walls, roadworks, power-lines, electronic communications apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipe-lines, reservoirs, water-mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
• installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection
• internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
• painting or decorating the internal or external surfaces of any building or structure
It also applies to services which form an integral part of, or are preparatory to, or are for rendering complete, the services described in the bullet points above including site clearance, earth-moving excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.
How to prepare
You’ll need to:
• make sure your accounting systems and software can deal with the reverse charge
• consider whether the change will impact your cash flow
• make sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will work
If the VAT reverse charge does not apply you should follow the normal VAT rules.
If you would like some more guidance on the VAT Reverse charge please get in touch 0161 495 4700