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The domestic reverse VAT charge comes into effect on 1 March - Tom Pemberton, Construction partner, writes for Building Magazine
- AuthorTom Pemberton
The domestic reverse VAT charge comes into effect on 1 March, Tom Pemberton's guide to the change is now available on Building magazine's website.
- In the most significant change to the treatment of VAT in the construction industry in a generation, the VAT domestic reverse charge goes live on 1 March.
- The government has rejected the latest attempt by the Federation of Master Builders (FMB) and others to put a stop on this.
- Additional administrative and (for some) cash flow burdens that the reverse charge will need to be managed at a time when the industry is already struggling with the challenges posed by the pandemic and Brexit.
- The change has been made in order to reduce “missing trader” fraud, which is estimated to result in lost VAT revenue of around £100m each year.
- A majority of EU member states apply their version of the domestic reverse charge to their own construction industries.
- The reverse charge covers all “construction operations” as defined by the Construction Industry Scheme, from the construction, alteration, repair or demolition of buildings or structures and infrastructure such as roads, railways and waterways, to trades such as painting and decorating.
Tom has many years’ experience of advising clients involved in the procurement, management, design and delivery of high profile building and infrastructure projects in the UK and internationally in the transport, energy, power, waste, process engineering, leisure, residential, retail and office accommodation sectors. He specialises in drafting and negotiating development agreements, construction contracts, professional appointments, collateral warranties, guarantees, bonds, direct agreements and other ancillary documentation. Tom works closely with clients to identify their objectives and the risks associated with the project, and takes a pragmatic approach to drafting and negotiating contract terms to support the achievement of a successful outcome.
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This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.