Reverse charge challenges

Neil Warren goes back to basics to explain how and when the reverse charge system applies in the UK VAT system

A radical reverse charge system was due to be introduced for the construction industry on 1 October 2019; however, it was cancelled at the eleventh hour to give businesses an extra 12 months to prepare for the new rules. 

There is no doubt that many advisers find the principles of the reverse charge very difficult to grasp. I even remember sitting with one accountant during a cricket match who was trying to work the charge out by means of old-fashioned T-accounts! 

Therefore, in this article I will consider some practical examples of how the reverse charge works in practice, and also the purpose behind these procedures, which are an important part of the UK VAT legislation.