Company COLUMN: 7 items to feel about ahead of VAT change

A Considerable change to how the construction sector accounts for VAT will be introduced from March 1, 2021. The changes utilize to companies generating or obtaining specified companies under the Building Field Plan (CIS).

The reverse shifts obligations for VAT accounting from the provider to the receiver. The receiver will have to account for output VAT on the offer been given and get well some or all of the enter VAT on the very same return. This will not produce a VAT price tag to a business entitled to get better all the VAT charged.

Each and every source in a chain, apart from all those to an ‘end use’, will be matter to the reverse charge. Supplies to the ‘end user’ will be issue to VAT at the acceptable price. ‘End users’ utilizes the companies for any reason other than creating onward materials of specified services, and includes a person receiving services to their personal premises.

End end users will have to provide a declaration to their suppliers which permits the charging of VAT, without this declaration the reverse cost applies.

The new policies do not affect supplies to non-VAT registered prospects or zero rated contracts this kind of as developing new dwellings.

Businesses need to look at:

* Examining clients, suppliers and contracts to determine their put in the supply chain and the ideal VAT cure

* Assess which sub-contractors could be impacted from a dollars-circulation viewpoint (quite a few use VAT charged to fund operating funds) and determine if payment processes ought to be amended to stop sub-contractors struggling

* Assure provides topic to the reverse demand are invoiced accurately, with the correct narrative

* Update VAT codes to effectively account for the reverse cost and to feed info into the accurate VAT return Box(es)

* A sub-contractor utilizing the flat fee scheme may perhaps want to go away the plan if they are entitled to VAT refunds. Every month VAT returns could be advantageous for businesses in a VAT reimbursement place

* Overview lawful files to consist of reference to buyer obligations and regardless of whether they are an “end user” for the functions of the reverse demand

* Upskill groups in accounts payable and receivable to the variations and their roles in ensuring organisations are compliant.

Armstrong Watson has a dedicated VAT workforce who are delighted to assistance and recommend on

the effect of the incoming adjustments.

Make sure you get in touch with Emma Forrester on 07887595494 or email emma.forrester@armstrongwatson.co.uk.