CIOT calls for delay in reverse charge VAT

The Chartered Institute of Taxation (CIOT) has called on HMRC to delay the start of the reverse charge VAT, which is set to come into effect on 1 October.

The CIOT hopes a delay will “lessen the likely flurry of disputes between suppliers and customers as to whether or not VAT should be charged”.

The concerns come as a recent survey by the Federation of Master Builders (FMB), found that 69% of construction SMEs have not even heard of the new reverse charge.

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The aim of the domestic reverse charge is to combat missing trader fraud in the construction sector. Under the scheme, a VAT-registered business, supplying certain construction services to another VAT-registered business for onward sale will not be required to account for VAT but must issue an invoice stating that the service is subject to the domestic reverse charge.

Linda Skilbeck, vice-chair of CIOT’s indirect taxes sub-committee, said: “We are concerned about the combination of a substantial lack of awareness, and lack of preparedness even among those businesses who are aware of the measures.

“We urge the government to delay the current implementation date. A start date of 1 April 2020 is more appropriate. This should allow time for a dedicated information campaign to be operated by HMRC, with the assistance of industry and professional bodies.”

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