VAT

The domestic reverse charge for construction services means that the customer (rather than the supplier) accounts for VAT on certain construction services. It applies to VAT-registered businesses supplying or receiving specified construction services under CIS. The aim is to reduce VAT fraud in the construction sector. Businesses affected must ensure their invoicing and VAT accounting processes are updated accordingly.

HMRC offers several VAT schemes to simplify compliance for small businesses, including the Flat Rate Scheme (pay a fixed percentage of turnover), the Cash Accounting Scheme (account for VAT when payment is received), and the Annual Accounting Scheme (submit one return per year). The best scheme depends on your business type and cash flow.

You must register for VAT when your taxable turnover exceeds the VAT registration threshold, currently £90,000 in any rolling 12-month period. You can also register voluntarily if your turnover is below this threshold, which may be beneficial if you have significant VAT-able expenses to reclaim.