Changes to way VAT is paid?

[Temp]

Small article in today's Times mentions planned changes to the way VAT is paid in the construction industry. Called "Reverse charged VAT" is says buyers will pay VAT direct to HMRC rather than to suppliers. Due to be introduced in October it is apparently aimed at reducing VAT fraud.

 

Doesn't say if it applies to self builders.

 

[Jeremy Harris]

Be interesting if it does apply to self-builders, as it opens up the opportunity to not have to pay VAT, perhaps, rather than have to claim it back on completion.  This would seem to be sensible, as it would save admin effort by HMRC in collecting VAT that they only have to refund later.  Mind you, common sense rarely applies when it comes to government, so it will probably never happen.

[andyscotland]

It only applies where a VAT registered building contractor supplies to a VAT registered building contractor. Instead of the supplier charging VAT, the customer effectively charges it and then (usually) reclaims it all in the same VAT return.

 

It won't apply to self builders because

A) they're not usually VAT registered

B) it doesn't apply if the customer is a main contractor / developer building property to sell or rent out themselves

C) it doesn't apply if the customer isn't registered as an employer under the construction industry scheme

D) it doesn't apply to work that's zero rated

 

The main place it will kick in is subbies charging a main contractor. This is because historically there's been an issue where a subcontractor charges VAT but doesn't actually pay it on to the government (e.g. because they're not actually vat registered or because they keep some invoices off the books).

[nod]

This will help me in my business 

At the moment I charge the contractor 

The charge the client 

The client claims it back

This happens year in year out