Reverse VAT Reminder

With businesses across the industry facing significant cashflow pressures due to rising inflation, Reverse VAT may be exacerbating the situation for contractors that generally work for other contractors. Under Reverse VAT, they no longer receive VAT on the services they supply but must still pay VAT to suppliers of plant and materials, which means they are likely to end up being due a VAT repayment from HMRC each quarter.

Build UK’s practical guide to Reverse VAT explains how the current system affects businesses across the supply chain and includes a checklist of things to consider, which can include switching to monthly rather than quarterly VAT returns to support cashflow. Any business that is unable to pay a VAT or other tax bill on time should contact HMRC as soon as possible to discuss the support available, such as a ‘Time to Pay’ arrangement, which allows for payment in instalments.