News
VAT REVERSE CHARGE MECHANISM
The operation of VAT in the construction industry is changing. The new system starts on 1 September 2008. As a principal contractor, you will need to be ready for the new system.
What is the new system?
From 1 September 2008 invoices from your sub-contractors will not include VAT. Instead you will have to charge yourself the VAT on supplies from subcontractors and include that VAT in your VAT return. This will affect the amount of VAT you pay to Revenue but not the amount you pay overall.
Example:
If you receive services for which a subcontractor charges you 1000 euro, not including VAT, then from September 2008;
the subcontractor should invoice you for 1000 euro (VAT not included)
you should pay the subcontracotr 1000
you should calculate the VAT on the service (1000x13.5%=135)
you should include this amount in your VAT return as VAT on Sales (T1)
you can claim an input credit for this amount (135) in your VAT on Purchases (T2) subject to the usual requirements.
Remember, if you are also a subcontractor, you should not charge VAT to your principal contractors from 1 September 2008
For more detailed information please visit http://www.revenue.ie/ or contact myself or Conor McCann in our office (01) 4604004.
The Sybiz development team are currently finalising the changes required within Sybiz Vision to ensure complaince with this change to VAT recording and reporting.
Sybiz Vision 7 and above will be compliant with these changes.