Measure
As announced at Autumn Budget 2017, and following consultation, the government will introduce a VAT domestic reverse charge to prevent VAT losses through ‘Missing Trader’ fraud. This occurs when traders collect VAT on their sales but go missing before passing that VAT on to HMRC. This will shift responsibility for paying VAT along the supply chain to the recipient of the services to remove the opportunity for it to be stolen by those traders.
Businesses supplying and contracting for construction and related services will be affected by the measure.
The new rules will have effect from 1 October 2019 and the government is publishing secondary legislation alongside the Budget to implement this change.
The implementation of the domestic reverse charge for construction services is as expected. In addition to understanding the scope of the rules, there are practical considerations for affected parties including configuring systems to manage these changes and identifying the various circumstances in which they make or receive construction services.