Businesses in the construction industry are reminded that on 1 October 2019 the new VAT domestic reverse charge will come into force. This is being introduced as an anti-fraud measure and will see a major change in accounting for VAT on some construction services. When it applies, the customer will become the party responsible for accounting for the VAT on the supply made to them. It is a change in 'B2B' sales: it does not apply to supplies made to end-users such as domestic purchasers.
As is usual with VAT, there are many complexities. However, in basic terms the VAT-registered supplier will issue a VAT invoice in the normal way, with a confirmation that the reverse charge applies to the supply, and the VAT-registered customer will pay the net amount of the invoice to the supplier: the VAT will be declared as output tax on the purchaser's VAT return and also reclaimed as input tax on the purchaser's return.
Compliance with the new regime will undoubtedly cause issue, especially as it is rather non-intuitive in operation.