August 13, 2021

GGF gets HMRC clarification on reverse VAT charge

GGF gets HMRC clarification on reverse VAT charge

The GGF recently contacted the government department HMRC (Her Majesty’s Revenue and Customs) for clarification on the exemptions for the reverse vat charge under the Construction Industry Scheme (CIS).

In the initial GGF letter to HMRC, the Federation asked for assistance and clarification with the recent changes in the CIS, in particular reverse charges to Value Added Tax (VAT) for contractors and subcontractors (CIS 340).

These type of companies have always been exempt from the CIS, but under the recent changes brought about after 6th April 2021, Building Firms, Main Contractors and some Customers are now operating the reverse charge of VAT with many sub-contractors throughout the UK.

It has resulted in many main contractors automatically making deductions from invoices without fully understanding the context of the scheme with regards to exemptions.

GGF Members have become increasingly frustrated that many of the main contractors are not following these exemption guidelines and just clustering all sub-contractors together and as such asked the GGF to contact HMRC for clarification.

On the 13th August HMRC replied to the GGF to confirm the following categories are out of scope of the CIS and should therefore not be subject to the reverse VAT charge. Please see exclusions below.

Operations excluded:

  • manufacture or offsite fabrication of components or equipment, materials, plant or machinery and delivery of these to the site – for example:
    • traditional building materials including components of windows/doors and conservatories
  • manufacture, delivery, repair, servicing or maintenance of these items:
    • fire protection works including Fire Resistant Glazing
  • manufacture and delivery of:
    • glazing materials including all components of windows/doors and conservatories
  • manufacture and installation of solar, blackout or anti-shatter film

To find out more about the CIS please link here

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