Next October, the domestic VAT reverse charge comes into effect. This will change the way that VAT is paid in the UK by businesses that are VAT-registered. However, it stands to affect those who work in the construction industry the most, particularly if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).

In essence, what it means that:

• The customer receiving goods/services will have to pay any VAT due to HMRC instead of paying the supplier.
• They will also be responsible for completing VAT Returns and applying to HMRC to reclaim any VAT that may be owed to them on the same Vat Return

Under the reverse charge, no VAT will actually paid by customers to suppliers, which should help to simplify the whole system. It also does not apply to ordinary consumers or final customers of building and construction services.