From 1st October 2020 main Contractors will no longer pay VAT to Sub-Contractors working on projects under the CIS Scheme. Instead, the main Contractor will pay the VAT directly to H M Revenue and Customs.
This applies to all building and construction contracts when:
- Your supply is standard rated or reduced rated for VAT
- Both you and your customer are VAT registered, and
- Your customer is not an End User.
Therefore, this rule basically governs payment by registered Building Contractors and Sub-Contractors to each other in the course of working on Construction Projects. The Government was going to bring in this scheme from last year, but they have postponed it to 1st October 2020.
If you are unsure of how this will work please get in touch with us and we will explain it further. This note is for general guidance only and specific advice should be obtained to deal with the situation of your business.
– By Stephen Handley, FCCA