With effect from 1st March 2021, VAT reverse charge is to be introduced for customers operating building and construction services, alongside changes to IR35 rules. If you are using a pre-2017 version of Dynamics Constructa then we have a created a new module to ensure your compliance with these changes.

What’s changing?

VAT reverse charge is to be introduced for customers operating building and construction services from 1st March 2021. If you are a customer within the construction industry receiving the supply of construction services subject to CIS, you will have to pay the associated VAT direct to HM Revenue & Customs (HMRC), rather than paying it to the supplier.

Supplies made to 'end users', supplies between connected parties and supplies between landlords and tenants will be excluded from the new rules if the customer notifies the supplier that the exemption applies.

Further guidance can be sourced directly from HMRC - https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services 

Additionally, the rules for IR35 are changing. End user clients of independent contractors must do something they have not legally been required to do before - undertake detailed assessments to determine whether each contractor is affected by IR35 and where they are, apply tax measures as if they were an employee. Where subcontractors are deemed to be inside IR35 they are no longer in scope for CIS and should therefore not be reported on the CIS return.

Further guidance can be sourced directly from HMRC - https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-intermediaries