VAT - Reverse Charge on Construction Services – New rules for Principal Contractors and Sub-contractors from 1st September 2008.

The new rules apply to principal contractors and sub-contractors involved in construction operations to which RCT applies (but excluding haulage for hire). From 1 September 2008 the charge the sub-contractor makes to a principal contractor does not include VAT. Instead the principal contractor calculates the VAT on the amount charged by the sub-contractor and accounts for the VAT directly to the Revenue Commissioners through his/her VAT return.

Visit Construction Services - New VAT rules for Principal Contractors and Sub-contractors - from 1 September 2008 for:

• Full details of new rules
• Summary leaflet for Principals and Sub-Contractors
• Frequently Asked Questions
• Check list for practitioners

In addition, a letter and the summary leaflet outlining the changes will issue to all principal contractors and sub-contractors shortly.

While the overall net amount of VAT payable on construction services remains unchanged, the reverse charge will entail a significant change in VAT payment patterns and administrative practices for many taxpayers. It is essential that your clients are aware of the need to begin to prepare for the change at this stage, to ensure a smooth transition to the new system from 1 September next.