HMRC issued its Revenue and Customs Brief on 6 September confirming implementation of the domestic reverse charge rules will be postponed by 12 months. This moves the implementation date from 1 October 2019 to 1 October 2020.
HMRC has stated their reasoning for the deferral is due to the implementation date coinciding with Brexit. In addition, the property and construction sector had expressed concerns as to whether affected businesses have had sufficient time to make necessary system changes.
For many taxpayers, the year delay will give them additional time to consider how they are affected by the new rules and to make the changes needed to their accounting and invoicing systems.
However, HMRC is aware that some may have already implemented changes. For businesses who have amended their invoicing processes in anticipation of the original implementation date of 1 October 2019, HMRC has stated that where genuine errors arise as a result, they will take the deferral into account.
If you would like to discuss how the VAT domestic reverse charge rules for construction services affect you and what you need to do to ensure you are compliant by 1 October 2020, please contact Robert Marchant or your usual Crowe contact.