Reminder of CIS VAT changes

Contractors and subcontractors registered for VAT and the Construction Industry Scheme will need to use the VAT reverse charge process for building and construction services from 1 March 2021.

VAT registered subcontractors affected by this change will no longer add VAT to their invoices to contractors. Instead, the contractors’ accounting system will need to add the deemed VAT to their VAT return on behalf of subcontractors, and at the same time, deduct the same amount as input VAT on the same return.

This will sound complicated but most accounting software can cope with the entries required. If you need help to set this up please call.

Contractors will only pay their VAT registered subcontractors the VAT-free amount invoiced, and as the reverse charge adjustment increases both input and output VAT by the same amount there is no cash penalty for either party

This new process only applies to certain types of services provided by subcontractors.

Please check with us if you feel you are affected but don’t know how to make or judge what you need to do.

If you have bookkeeping software that can be adapted to deal with this change then once appropriate changes are made, processing subcontractors’ invoices should be no more difficult than before the change to the reverse charge.

Latest Blog
28
Aug

Effects of the US presidential election

The American presidential election may have significant effects on the United Kingdom...

Read More
27
Aug

Further drop in interest rates

Interest rates are a powerful lever in our economy. Increase rates and economic activ...

Read More
22
Aug

Rachel Reeves announcements since the election

Since Rachel Reeves was appointed Chancellor of the Exchequer in May 2024, she has ma...

Read More
20
Aug

Private pension contributions

Tax relief on private pension scheme contributions is a significant incentive in the ...

Read More