With effect from 1st March 2021, VAT reverse charge is to be introduced for customers operating building and construction services, alongside changes to IR35 rules. If you are using a pre-2017 version of Dynamics Constructa then we have a created a new module to ensure your compliance with these changes.
VAT reverse charge is to be introduced for customers operating building and construction services from 1st March 2021. If you are a customer within the construction industry receiving the supply of construction services subject to CIS, you will have to pay the associated VAT direct to HM Revenue & Customs (HMRC), rather than paying it to the supplier.
Supplies made to 'end users', supplies between connected parties and supplies between landlords and tenants will be excluded from the new rules if the customer notifies the supplier that the exemption applies.
Further guidance can be sourced directly from HMRC - https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services
Additionally, the rules for IR35 are changing. End user clients of independent contractors must do something they have not legally been required to do before - undertake detailed assessments to determine whether each contractor is affected by IR35 and where they are, apply tax measures as if they were an employee. Where subcontractors are deemed to be inside IR35 they are no longer in scope for CIS and should therefore not be reported on the CIS return.
Further guidance can be sourced directly from HMRC - https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-intermediaries
How can Kick help?
We’ve developed a new module to allow your business to seamlessly manage these changes within your Dynamics Constructa environment.
This new Constructa module enables processing for IR35 and the domestic reverse charge for building and construction services, allowing you to identify projects and subcontractor orders that are subject to the reverse charge VAT.
The module will also enable you to flag subcontractor orders and invoices as being ‘inside of IR35’ or ‘outside of IR35’, ensuring the correct CIS and VAT treatment can be processed.
When is the new module available?
Our new Constructa module will be available from 31st January 2021.
How is this new module priced?
Installation of this new Constructa module involves a one-off cost to deliver set up and training, with an ongoing annual subscription cost. The cost is detailed below, exclusive of VAT:
Can I discuss this further?
Your account manager will be in touch with you regarding this module. However, feel free to contact them direct at your earliest convenience.
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