Following the implementation (if you can call it that) of Brexit, the latest VAT initiative which is the VAT Reverse Charge for the Construction sector is now being rolled out. 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, 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:
– You invoice the customer direct – no change to your current procedure
– You are a subcontractor invoicing a contractor – your invoices are net of VAT
– 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 maybe 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 March 2021 and early preparation, particularly in respect of wording on invoices, is recommended.
We have found some useful information on help with this, click on the below links to download..