Importantly, the newDomestic Reverse Charge scheme applies only to services which are required to be included in a return of payments under CIS. These returns are made mainly by contractors but could also extend to “deemed contractors”. Deemed Contractors are businesses which spend more than £1m a year on construction operations but do not fall within the scheme as a traditional Contractor of subcontract building services. However, the scheme excludes end users so deemed contractors will usually be outside the scope of the Domestic Reverse Charge Scheme. It will be important both for suppliers and customers to be aware of their responsibilities under the new scheme. Suppliers will need to be confident, before agreeing not to charge VAT, that a customer is in fact a contractor and not an ‘end user’. Customers will need to ensure that a supplier does not incorrectly charge VAT on supplies that ought to fall within the scheme, for such VAT will not be recoverable as input tax. In each case, robust systems will need to be in place to give the necessary confirmations. As Construction services may be charged at different VAT rates dependent upon what work is being undertaken, the onus is on the contractor to verify the correct rate to be used for the reverse charge (or if is to be used at all).


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