UK VAT rules on property and construction have always been complex and sometimes confusing. 

From 1 March 2021, a new domestic VAT reverse charge will be introduced for specified building and construction services. The new regime, which will have a significant impact on the sector, will require the purchaser rather than the supplier to account for VAT on certain construction services.

Why has this legislation been introduced?

The new rules are intended to combat missing trader fraud within the construction sector. Organised criminal gangs currently steal millions of pounds worth of VAT each year through missing trader fraud in this industry. The implementation of this regime should make it more difficult for fraudsters to perpetrate missing trader fraud as it will be the customer, rather than the supplier, who is responsible for accounting for the VAT on the supplies.

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