HMRC Guidance: Agent Update – issue 89

Tax

• Plastic packaging tax
• VAT reverse charge
  • VAT registered construction businesses should note that this reverse charge came in on 1 March 2021. The Revenue and Customs Brief issued in June 2020 contains more information.

    In January 2021, a letter was sent to every VAT-registered construction business. This followed letters previously sent out in February and September 2020, advising them to check if they’re liable for the reverse charge. If they’re liable, they need to apply these rules now.

    Find more information on the scope and operation of the reverse charge.

    The key aspects are:

    • it applies to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services
    • the contractor is responsible for paying the output VAT due rather than the sub-contractor, and can continue to reclaim this amount as input tax
    • the scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme (CIS), but does not include supplies of staff or workers for use by the customer
    • the legislation introduces the concept of ‘end users’ and ‘intermediary suppliers’

    This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and, as such, are excluded from the scope of the reverse charge if they receive such supplies.

Making Tax Digital

• Making Tax Digital for Income Tax Self Assessment

Source gov.uk