On 5 September 2019, an order was made to defer the commencement date of the VAT reverse charge on construction services to 1 October 2020.

The Value Added Tax (Section 55A)(Specified Services and Excepted Supplies) Order 2019 (SI 2019/892), provides that the reverse charge will apply to business-to-business supplies of construction services if the recipient is not the final consumer. The reverse charge was announced in the Autumn 2017 Budget, following a consultation by HMRC on VAT fraud in the construction industry.

The deferral will no doubt be welcomed by the construction sector as a number of trade bodies had written to the Chancellor of the Exchequer highlighting the cash flow impact of the changes.

On 6 September 2019, HMRC published Revenue and Customs Brief 10, in which it explains the reasons for the delay in implementation.

The Brief can be viewed here.