The Construction Industry Scheme (CIS) Reverse Charge was originally planned to be introduced from 1 October 2019 but has now been delayed until 1 October 2020.

As from 1 October 2020, the new reverse charge rules will apply if the following conditions are met:

The supplier and customer are both VAT and CIS registered
The supply of services includes ‘construction’ services.
The services supplied are subject to 5% or 20% VAT.
Payment has to be reported under the CIS rules.
The customer is not an ‘end user’ so the supplies must be between business to business.
The supplier and customer are not connected.

The aim of the measure is to reduce VAT fraud in the building and construction sector and the new rules will mean that VAT and CIS registered customers will have to self-account for the VAT due and pay the VAT to HMRC instead of paying the supplier.

Letters will be sent to businesses registered with HMRC VAT and CIS systems in January 2020.