VATREVCON13000 - Introduction: Law
Section 55A of the VAT Act 1994 requires that customers account for VAT on specified supplies of goods and services. This section provides the vires introducing domestic reverse charges to prevent missing trader fraud and sets out conditions that must be observed. The construction services subject to this reverse charge procedure are defined in the Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) Order 2019 (SI 2019/892). Guidance is provided in Check when you must use the VAT domestic reverse charge for building and construction services and the VAT domestic reverse charge technical guide.
The coverage of SI 2019/892 mirrors that of the Construction Industry Scheme as set out in in Finance Act 2004 Part 3 Chapter 3 and The Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045), except for supplies of staff by employment businesses, which are not covered by SI 2019/892.
Where there is a single supply for VAT purposes and only part of the supply comes under the list of construction operations as set out in SI 2019/892 art. 5, the whole supply for VAT purposes will be subject to the reverse charge.
The construction reverse charge came into effect on 1st March 2021, and has effect in relation to supplies made on or after that date (SI 2019/892 art. 1(2)).