Gloucestershire businesses and many firms across the construction industry are being urged to ‘put their planning place’ ahead of upcoming changes regarding Value Added Tax (VAT).
As of October 2020, HMRC will be implementing a series of ‘complex’ new VAT rules around the domestic reverse charge (DRC) that will impact the construction industry across the UK. Taking effect from October 1st 2020, the DRC will see responsibility for accounting and paying VAT shifting from the supplier to the customer, meaning that the customer has to ‘self-account’ for VAT on their returns.
The DRC affects how VAT is accounted for, and as such, many businesses will need to make changes to their systems including updating tax codes for sales and more.
Elaborating on what the new rules mean, Gemma Brindley, Director at national audit, tax, advisory and risk firm, Crowe, said: The DRC rules are complicated and even though the implementation date is 12 months away, changes to systems and processes can require both time and financial resource. In addition, those businesses whose cash flow will be adversely affected may need to consider what options are available to them to help bridge funding gaps.
“We, therefore, recommend businesses seek specialist advice to consider how they will be impacted by the DRC, what changes are needed to become compliant and what communications if any, they need to enter into with suppliers and customers.”
Crowe VAT specialists Hayley Hill and Gemma McCaldon-Gower will be speaking about the DRC and how it will impact businesses at the Annual Construction & Engineering Conference tomorrow at the Queens Hotel in Cheltenham.