Search
  • Laura Keeble

CIS & Reverse Charge VAT

From 1st March 2021 VAT charging & reporting for contractors and subcontractors within the Construction Industry Scheme has changed .VAT will now be accounted for by the final contractor in the chain. The change affects those who are both CIS and VAT registered


I’m a subcontractor what do I do?

  • Invoice your contractor as you normally would, but don’t charge them the VAT

  • Instead, state on the invoice that the reverse charge applies and the customer is to pay to the VAT, showing the VAT rate and amount

  • On your VAT return, only enter the net sales amount in box 6 of your VAT return

  • This will have an effect on your cashflow, as you will pay VAT to your suppliers, but won’t be charging it to your contractors

  • You may find you will reclaim VAT from your VAT returns though, rather than paying it to HMRC. If this is the case, moving to monthly VAT returns can help with cashflow


I’m a contractor, what do I do?

  • You will receive an invoice from your subcontractor with no VAT charged. Make the usual CIS deduction and pay the balance due

  • On your VAT return you need to report your records for the purchase, and the sales VAT on behalf of the subcontractor:

  • The subcontractors sales VAT amount in box 1

  • Your purchase VAT in box 4

  • Your net purchase value in box 7

  • You won’t pay the VAT amount to your subcontractor, and it won’t affect the amount of VAT you have to pay HMRC

1 view0 comments

Recent Posts

See All

Do I need a bookkeeper or an accountant?

A common query from business owners is, who do I need to help me? An accountant or a bookkeeper? Most accountants do offer bookkeeping services, but this will likely be at a higher charge than a bookk

Why do I need a bookkeeper?

Good bookkeeping is an essential part of any successful business. A business owner needs to have a clear picture of how the business is performing financially, to enable them to make the right decisio

Choosing the right type of business for you

When you decide to start your own business it is important to think about the type of business you want to have and where you want it to go. There are different options for the type of business you ca

 

07766 813949

01449 673795

  • Facebook
  • LinkedIn
  • Instagram

©2020 by LK Bookkeeping Solutions