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Blog from the Dog - WTF! VAT: in Domestic reverse charge on building and construction services situations

OK, listen up hoomans - this is important.

Back in March, I wrote my Blog from the Dog - new VAT rules for the construction industry.  In it, I gave you the heads up on the VAT changes coming into effect from 1 October that will impact construction businesses.

Now, I admit this was not my finest hour as around the time of writing that blog, I was still reeling from my fat balls misdemeanour. As a result, I misheard a “F” as in fat for a “V” as in VAT. However, this time I know I have it right and you need to know what is coming and what to do about it.

Latest guidance from HMRC

Anyway, it appears that the not so nice people at HMRC have issued some further guidance on these new VAT rules. There are 1 or 2 surprises lurking in the guidance that need to be brought to your attention, as they are quite complex and confusing.

I have just overheard Jonathan talking to one of our contractor clients about the new rules. He’s explaining the impact this would have on both the client and the sub-contractors they use to undertake construction work. 

Our client understood the issue but wondered how he was going to explain the situation to his sub-contractors. He says they’re brilliant electricians but, when it comes to VAT, they are about as clueless as me when I try to fathom why hoomans like cats.

Jonathan suggested there were 2 options:

Option 1

A bit of verbal role play with Jonathan playing the part of the Contractor (known as “Jack Russell”) and the contractor playing the part of the sub-contractor (known as Al Satian) having a telephone conversation, which went like this:

Al Satian - Can you please run through the new rules for the 5th time, as I am still struggling with why I don’t charge you VAT anymore?

Jack Russell (clearly exasperated) - OK. let’s try it this way. How many ‘F’s’ are there in “VAT: in Domestic reverse charge on building and construction services situations”?

Al - But Jack, there is no ‘F’ in “VAT: in Domestic reverse charge on building and construction services situations”!

Jack - Exactly! Glad you’ve finally understood the situation, Al. HMRC has removed the ‘F’ in VAT. Goodbye!

Both the client and the Rowdens’ team all thought this was hilarious, but I fail to understand why “no F in Vat” was so funny; you hoomans are weird!

And Option 2 was?

Hang on a minute, Penny has just appeared with my lead and is promising a walk in Eartham Woods. So, if you want to know what Option 2 was, just follow Rowdens on Facebook and I’ll let you know when we’ve updated the website. On the other paw, you may have more questions and need advice, so please contact the nice team here at Rowdens who will be happy to help.

Speak soon
Lyra