No, it’s not a line from the Cha Cha Slide but following hot on the heels from MTD we have the latest VAT initiative which is the VAT Reverse Charge for the Construction sector. As with MTD, the impending rules and regulations may appear to be slightly scary, particularly in the SME arena/ you trying to interpret the HMRC language but fear not the majority of the scheme is fairly straight forward, the keys to this scheme are:
- Know who your customer is;
- Ensure you have the correct wording on your invoices, as this follows on from MTD you should have accounting software that has a solution to this;
- Ensure the VAT is accounted for correctly if you fall within the following categories:
A. You invoice the customer direct – no change to your current procedure.
B. You are a subcontractor invoicing a contractor – your invoices are net of VAT.
C. You receive an invoice from a subcontractor – you record the VAT as both an input VAT and an output VAT entry.
There are some nuances that may be raise their head but HMRC have stated that they will be taking a soft approach to penalties in the first 6 months.
The scheme starts 1 October 2019 and early preparation, particularly in respect of wording on invoices, is recommended.
We are holding a seminar on the 26th September so welcome any businesses that need any further guidance.