The recent changes to VAT for the Construction and Trade Industry means that VAT is now processed differently for those registered for CIS.
Previously the Subcontractor would have paid VAT to HMRC, but now the customer (Contractor) is responsible for the VAT due to HMRC instead of the supplier (Subcontractor).
It does not change anything for the Customer (End User).
As the Contractor, what does it mean for me? Instead of paying VAT to the Subcontractor, you'll pay it directly to HMRC in your quarterly VAT return.
For the Subcontractor, this may mean a temporary cash flow issue as you'll be receiving less money that you'll be used too, but it should also mean that your VAT bill is greatly reduced.
HMRC have introduce the new scheme as an Anti-fraud measure designed to counter sophisticated criminal attacks on the UK VAT system.
It only affects VAT Registered construction businesses that supply or receive services under CIS (Construction Industry Scheme).
