Draft legislation: VAT reverse charge for construction services
Consultation description
HM Revenue and Customs (HMRC) has published a draft statutory instrument for technical consultation with a draft explanatory memorandum and draft tax information and impact note.
It is inviting comments on these - they will be of most interest to sub-contractors and contractors carrying out supplies reported through the Construction Industry Scheme.
The draft legislation will make supplies of standard or reduced rated construction services (‘specified supplies’) between construction or building businesses subject to the domestic reverse charge, meaning that the customer will be liable to account for VAT due, instead of the supplier.
The legislation will not apply to specified supplies made to customers who are consumers, or to those that use specified supplies to make other supplies, such as those selling new houses.
The draft tax information and impact note that we have published with this consultation will help explain the potential impact of the proposals on the economy, business, individuals, and other areas.
Before commenting, we recommend that you read:
- the draft legislation
- the explanatory memorandum
- the tax information and impact note
You may also want to read the outcome of our consultation on using VAT and other policy options to tackle fraud in the provision of labour in the construction sector.
The order will be made under powers in section 55A of the VAT Act 1994 and, as has been previously announced, a final version of the draft order and guidance will be published before October 2018.
The legislation will take effect on 1 October 2019.
