The Domestic Reverse Charge (DRC) for the construction sector comes into effect as of 01/03/2021.
What does this mean for you?
If you are VAT registered & you work falls under the Construction Industry Scheme (CIS) then from the 1st of March you will need a written declaration from your contractor that they are classified as an end user.
An end user simply put is the land owner or an intermediary company with a direct link to the land owner.
If they are classified as the end user then nothing changes and VAT will be paid to you to then declare on your VAT returns.
However, if you are not working for the end user, the VAT will not be paid to you and it will be your contractors responsibility to declare the VAT from your invoice to HMRC.
If you are on a flat rate scheme and some or all your work falls under the DRC then we advise you to consider writing to HMRC and cancelling your flat rate scheme for VAT. If the majority of your work is not for the end user, then most definitely do this immediately or call us and we can advise you.
If you need help understanding the DRC and how it applies to you then please do not hesitate to contact us on 020 8761 8000.
At Taxfile we specialise in the construction sector, calculating and submitting Making Tax Digital (MTD) compliant VAT returns for numerous sole traders and limited companies. If you are looking for an accountant to manage your MTD VAT returns, then we can help you.