Reverse Charge Delayed

October 6, 2019

When the government announced their plans to implement the DRC (Domestic Reverse Charge), it would be fair to say there was wide spread anger and protest from the construction industry.

The new regulation meant that customers receiving services from suppliers would have to pay VAT owed on the goods and services to HMRC, rather than paying the supplier and sending money back through the supply chain.

The move was aimed at reducing VAT fraud across the industry but it's critics said it was ill timed and badly planned, leaving the industry in absolute chaos due to the speed that the HMRC planned to implement the DRC.

However following pressure from a group of bodies such as the Federation of Master Builders (FMB) and the National Federation of Builders, the HMRC have made a rare climb down and postponed the DRC until October 2020. National Federation of Builders chief executive Richard Beresford said: “Contractors and subcontractors weren’t ready for reverse charge VAT and we are delighted that the government has listened to our industry campaign to seek a delay.

The HMRC has committed to the new Reverse Charge and assure us that the controversial scheme will absolutely be going ahead, however it said the delay would enable it to raise awareness of the changes and give leeway to companies who had not yet started to prepare themselves. In an official statement, the HMRC said "HMRC recognises that some businesses will have already changed their invoices to meet the needs of the reverse charge and cannot easily change them back in time. Where genuine errors have occurred, HMRC will take into account the fact that the implementation date has changed."

Magpie Taxation are fully up to date on the new DRC and would be pleased to help your business meet the new changes in 2020.

Give us a call today to discuss how we can help.

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