(This note is not part of the Order)
This Order, which has effect in relation to supplies made on or after 1st October 2019, applies a VAT reverse charge to construction services.
As a general rule, it is the supplier of goods or services who is required to account for VAT on those supplies. However, section 55A of the Value Added Tax Act 1994 (c. 23) requires the recipient, not the supplier, to account for and pay tax on the supply of any goods and services which are of a description specified in an order made by the Treasury for that purpose. This accounting requirement is commonly referred to as the “reverse charge”.
Article 2 defines certain terms that appear in this Order.
Article 3 provides that the reverse charge will apply to services of a description specified in article 4 and that the supplies specified in article 8 are excepted from the reverse charge.
Article 4 specifies construction services as being services to which the reverse charge applies.
Articles 5 to 7 define construction services, specifying what services are and are not included within the term.
Article 8(1) provides for exceptions so that the reverse charge will only apply where construction services are supplied to other construction businesses. Article 8(2) provides that certain exceptions may not apply where other construction services are being supplied by the same supplier to the same recipient in relation to the same construction site and those other services do not qualify as excepted supplies.
Article 9 makes provision for supplies of construction services comprising a number of elements to be excepted from the reverse charge only when all of those elements would be excepted if separately supplied.
Article 10 provides that section 55A(3) of the Value Added Tax Act 1994 (which makes provision for reverse charge supplies to be treated as supplies made by the recipient for the purposes of VAT registration limits) shall not apply in relation to construction services as defined in this Order.
A Tax Information and Impact Note covering this instrument has been published and is available on the government website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.