If you’re a VAT registered business in the construction and building services industry, then the introduction of the new reverse charge mechanism may apply to you. From 1st March 2021, you will need to:
- Work out if any of your sub-contractor expenses need to be accounted for under the reverse charge.
- Ensure you account for these correctly through the Starling Toolkit, make sure you pay these expense invoices on the day they are issued to you.
- Once you’ve made the payment, select the transaction in the Bookkeeping section of Toolkit and toggle on Construction Reverse Charge in the collapsible VAT section. This will now pull correctly into your return.
If you are issuing an invoice for one of the listed services, make sure to put one of the recommended excerpts from HMRC in the invoice footer (which can be added in Invoicing settings or the draft invoice) along with the VAT amount the customer needs to declare on their return.