What is the reverse charge in construction?

The implementation of the domestic reverse charge for building and construction services is being postponed by a year. The mechanism, which is intended to tackle VAT fraud in the construction industry by reversing the responsibility to pay VAT from the supplier of construction services to the recipient of construction services, will now be implemented from 1 October 2020.

This is to allow businesses more time to prepare, and to avoid changes coinciding with Brexit. The substance of the mechanism remains unchanged. The Government remains committed to the introduction of the reverse charge and has already increased compliance resource. HMRC intends to use the extended time frame to raise awareness, and to provide additional guidance and support to ensure that businesses will be ready for the new implementation date.