Construction Industry Scheme (CIS)

In October 2020 HMRC will introduce reverse charge VAT rules which will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).  This is informally described as “CIS reverse charges” and will affect apply to both invoicing and VAT returns.

What to do to ensure compliance with CIS

There is no need to register for this scheme beforehand, however if you supply, or acquire, specified services that are covered under the reverse charge VAT rules, then you will need to change your procedures for raising, and paying invoices, to ensure that VAT is not paid to applicable sub-contractors. Your VAT returns will also need to reflect the reverse VAT rules.

Over the coming year businesses should ensure that their accounting systems are able to deal with this change in VAT. It is also worth taking into consideration how this scheme will affect cashflow, for example, as a sub-contractor you may no longer receive VAT payments from your customers for services.

Useful resources

Sage have put together a useful blog that lists common questions they have come across about CIS reverse charge, read the full blog here.

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