Reverse charge rules for the construction industry

Writing this article is like being the best man preparing to give his speech at a celebrity’s third wedding: how can I make my words different to the previous two events? The reverse charge rules for the construction industry will be introduced on 1 March 2021 a case of third time lucky after justified delays by HMRC in both October 2019 and the same month in 2020. I have written articles for Taxation on this subject before so my intention here is to recap on the basic rules but also to highlight some new issues that are relevant to ‘take three’.

Motive for change

The reverse charge procedures are intended to reduce VAT fraud in the construction industry. Instead of a builder charging £100 plus £20 VAT to another builder and then disappearing before paying output tax to HMRC on a VAT return he will...