At the eleventh hour, the government and HMRC have finally taken notice of the construction industry’s repeated appeals and announced a 12 month delay in the implementation of the reverse charge which will now take effect from 1 October 2020.
It will still take place but the delay gives the industry a further breathing space to make the necessary changes to systems which, coming so soon after MTD and with all the disruption and uncertainty arising from Brexit, were proving to be causing a lot of difficulties.
Many businesses will have already gone a long way down the process of change and HMRC have promised to be sympathetic to any errors that arise, saying:
HRMC 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.
Some businesses may have opted for monthly VAT returns ahead of the 1 October 2019 implementation date which they can reverse by using the appropriate stagger option on the HMRC website.
It is important that the construction industry take advantage of this delay to ensure that they are ready for what will be a significant change to their VAT procedures.
If any business need help with this reversal of policy or with implementing the change to take place from 2020, please contact your usual Bishop Fleming advisor.