HMRC issues proposals on proposed changes to how VAT on labour invoices is charged within the Construction Industry

Earlier this year HMRC issued a document which consulted on the problems surrounding the current method of charging VAT on labour invoices in the Construction Industry scheme. Following the government summary of responses to that consultation, published on 1 December 2017, HMRC has issued further guidance on its proposal to introduce a VAT reverse charge for construction services with effect from 1 October 2019 and to use HMRC’s increased compliance activities to address the fraud identified in the Construction Industry Scheme. The full document can be read at:

This would appear to suggest major changes to the current system.  HMRC will publish a technical consultation on draft legislation for a VAT reverse charge in spring 2018, with the legislation to be implemented with effect from 1 October 2019. A final draft of the legislation and guidance will be published by October 2018. During this period, HMRC will set up stakeholder implementation groups to work with businesses to support them in making the change. ICB would like any members who are involved with the CIS and who are willing to work together to fully understand the implications of the proposed change, to contact Jacquie Mount, Head of Technical Policy through her email ICB can then be included in the stakeholder groups which will meet once the draft legislation has been published to include our ideas as to how this change can more easily be implemented.