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VAT Reverse Charging – What you need to know

HMRC June 2019 Guidance Document is available here.

From the 1st October 2019 certain sales invoices will be subject to new VAT provisions. VAT Reverse Charging will apply to the following contracts:

• Those where the participants are subject to CIS.

• Those where the end-user (Employer) is retaining the built asset for their own use.

• Those where ‘sales’ comprise labour, material and/or plant.

• Those that may include an element of excluded sales but where those excluded items form part of the whole.

VAT Reverse Charging will NOT apply to the following sales / contracts.

• Sales entirely consistent of supply-only assets.

• Sales entirely comprising of the installation of security systems (burglar alarm) closed circuit television and public address systems.

HMRC's approach to mixed supplies: 

The legislation is designed so if there is a reverse charging ‘element’, in a supply, then the whole supply will be subject to Reverse Charging. A significant amount of communication will be required.

If in doubt, provided the recipient is VAT registered, and the payments are subject to CIS, it is recommended that the reverse charge should apply.

View ECA External Consultant Guidance June 2019 here.

View ECA External Consultant letter to (sub) subcontractors here.

View our VAT Reverse Charging For Building Construction Services diagram here

Members are advised to download our letter template to distribute it to their supply chain partners.

View our guidance note on Late Payment of Commercial Debts (Amendment) Regulations 2018

View latest guidance on Domestic VAT Reverse Charge 

ECA Group Companies & Brands: