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CONSTRUCTION INDUSTRY – WILL YOUR CASHFLOW SUFFER AFTER 1st MARCH?
17 February @ 9:30 am - 10:30 am
If you’re a contractor or a sub-contractor, please read on as recent HMRC changes will affect you in as little as three weeks…
HMRC have moved the goal posts again, if you’re found not to be compliant with the new VAT changes for trades businesses, you could find yourself either:
- Struggling to maintain your cashflow
- Getting fined for errors on your VAT returns or non-compliance
Domestic Reverse Charge (DRC) VAT legislation is about to change the way CIS registered construction businesses handle and pay VAT. From 1 March 2021, many contractors in the construction industry will stop paying VAT to their subcontractors. Instead, the contractor will pay the VAT directly to HM Revenue & Customs.
What does this mean for you?
If you are a CIS subcontractor, you will no longer charge VAT to your CIS customers. Instead, on your invoices you need to state that your customer is responsible for the VAT and show what VAT rate should be applied.
If you are a CIS contractor when you receive a bill from your CIS subcontractor, you are responsible for reporting both the input and output VAT on that bill.
This change will affect your cash flow and your accounting processes for example, if you are a contractor you will need to know how to correctly account for the VAT you have deducted on your returns. If you are a subcontractor your cash flow will suffer due to no longer being paid VAT on your invoices but still having to find the money to pay VAT on your materials etc.
If you will be affected by the DRC legislation coming into place on 1st March 2020, it is important that you are prepared and up to speed on what you need to do in order to avoid timely and costly invoice errors and HMRC consequences.
Luckily there are things you can do to minimise the impact on your business and help is at hand! If you would like to know more… we invite you to our FREE zoom webinar on Wednesday 17th February at 9.30am where we will explain the changes in more detail, tell you how you can minimise the impact on your cashflow and of course you will have the opportunity to ask questions.
You can join the webinar by contacting Toby Dunne: Toby@bellsaccountants.co.uk
P.S. If you do not run a CIS registered business yourself but you know someone who does, or if you have friends in construction trades who you think this may help, please do forward this to them as our webinar is open to all.