2 minute read
Business Support
Accredited Contractor Maylim - Greenwich Block 3
Report by Owen Baker
Technical Officer (Policy & Research)
From 1st March 2021 all sub-contractors supplying services to a VAT-registered contractor will no longer receive VAT from the contractor. Instead, the contractor will pay the VAT normally paid to the sub-contractor, directly to HMRC.
This means if you are a VAT-registered subcontractor, registered with the Construction Industry Scheme (CIS), who currently receives VAT payments from a contractor client, as of 1st March 2021 you will no longer receive VAT from these clients.
This change will affect nearly all landscape contractors and sub-contractors, and it is important members understand the consequences of the changes.
LANDSCAPE. PLANT. MAINTAIN. DONE.
The new charge will apply where the customer (contractor) and the supplier (sub-contractor) are both: • VAT registered • Registered with the CIS • Undertaking works that are either subject to standard rate (20%) or reduced rate (5%) VAT.
The reverse charge will apply to the same services currently reported under the CIS, which includes the following landscape services: • Landscaping a housing estate, an industrial estate or the surrounds of a house as a finishing operation in a wider project of construction • Landscaping a location following demolition of buildings or structures • The construction of walls, drives, patios and suchlike, as part of
‘routine landscaping’ • Tree-felling as part of site clearance • Turf laying as part of a wider project of construction.
The reverse charge does not apply when only materials are supplied but does apply when the cost of materials is included within a service provided – and this is regardless of material or labour content. If they are on the same invoice, all are included in the reverse charge procedure. The VAT reverse charge for building and construction services does not apply if: • Contractors use sub-contractors for zero-rated work • If the contractor or sub-contractor is not VAT registered • Where building or construction works are for end users (consumers and final customers). From now on, contractors must: • Advise the supplier (sub-contractor) if they are an end user – and therefore not subject to the reverse charge – in writing Sub-contractors must: • Ask the customer (contractor) if they are an end user and should record this request and any response in writing and retain as evidence • Identify and record evidence supplied to suggest the customer (contractor) is VAT registered and subject to CIS.
If the customer is not an end user and subject to the VAT reverse charge, the sub-contractor must advise on their invoice that the reverse VAT charge applies. Whilst no VAT will be charged on the invoice, the invoice must refer to the reverse charge and how much VAT is due (20% or 5%).
U17-3αHI: The versatile, compact all-rounder
Extremely adaptable; the zero-tail swing U17-3αHi is packed with features that let you take on much more. With an adjustable undercarriage (1.24m to 0.9m) it’s ideal for landscaping in tight places whilst an adjustable oil flow and optional extra-long arm make it even easier to take on tough groundwork tasks.
