Martin Aitken & Co Ltd News & Developments
VAT update: reverse charge from Oct 2019, things to watch out for in your VAT return, MTD for VAT and VAT explained video series.
Please note: on Friday 6 September HMRC announced that the introduction of the Reverse Charge would be delayed for a year, until 1 October 2020 >read more. HMRC say the delay is to give affected businesses more time to prepare.
The existing rules (i.e. no Reverse Charge for construction supplies) will continue to apply until then. If you have any query regarding this please contact our VAT Manager This email address is being protected from spambots. You need JavaScript enabled to view it..
VAT change coming for construction industry
The new measures are being introduced to reduce VAT fraud and evasion by placing the responsibility for VAT on the customer. HMRC believe that some small VAT-registered suppliers are charging VAT to their customers, but not then paying the VAT on to HMRC.
The reverse charge mechanism won’t apply in certain circumstances, for instance:
- If the supplies are zero-rated, including the construction of housing.
- The customer is an ‘end user’, for instance the property owner or the main contractor who sells a new build to a customer.
- Where businesses that supply certain services to connected parties within a corporate group structure, or with a common interest in land.
- The supplier and recipient are landlord and tenant, or vice versa.
Instead, the normal VAT accounting rules will apply to these supplies.
If you are concerned the new reverse charge mechanism will make your VAT administration more complicated, we can advise you on how best to handle it.
VAT explained video series: five short videos covering a range of topical issues, including the reverse charge, land & buildings and the 'option to tax' >watch now
Three things to watch out for in your VAT return
Counting down to Making Tax Digital for VAT
Despite calls from the House of Lords at the end of last year to postpone MTD, there appears to be no stopping this significant change going forward. The first wave of implementation requires all VAT-registered businesses with turnover above the £85,000 VAT threshold to file and pay VAT online through specific software interfaces, as well as keep digital records.
The pilot programme was expanded in October to cover around 500,000 businesses and you can still join it. HMRC is still issuing guidance and clarification, so it’s important that you know where you are in your preparations.
MTD for VAT webinars - three short webinars on what you need to get ready for 1 April 2019. Hosted by Mark McRae and Kim Matheson from our Cloud Accounting and Business Advisory team >watch now
Businesses that are eligible for MTD for VAT should now be working through the developments necessary to be able to comply. Depending on how you have been managing your accounting, you may need to change in one of the following ways:
• Move from paper-based records to digital MTD.
• Move from spreadsheets to filing with MTD via bridging software.
• Move from spreadsheets to full MTD-enabled software.
• Work with your existing software as it becomes MTD compatible.

It may take time to settle into the best solution. But even if you are not immediately affected by the 1 April change for VAT, there are other deadlines on the horizon. Certain other VAT registered businesses will need to start filing under MTD from October 2019, and from April 2020, MTD is scheduled to be implemented for income and corporation taxes. All VAT registered businesses may also end up coming under MTD, regardless of turnover.
If you are in the first wave of businesses required to move to MTD for VAT on 1 April, you need to ensure that you are ready. Get in touch if you need to discuss your MTD preparations. Email: This email address is being protected from spambots. You need JavaScript enabled to view it. to arrange an appointment.