The government have decided to delay the start of the proposed VAT reverse charge for supplies by sub-contractors in the construction sector.
The reason for the u-turn is the lack of awareness of the change that was originally due to start this month, on 1 October 2019. Many sub-contractors, and some main contractors, were not prepared for the changes on top of getting to grips with Making Tax Digital for VAT and consequently the government have decided to delay the start of the new rules for 12 months.
It has also come to light that some of those sub-contractors using the VAT flat rate scheme would be worse off which will require a review of whether that scheme is still worthwhile for them.
We will keep you informed regarding how the plans develop in the run up to the new proposed implementation date of 1 October 2020.