Allenby Accountants Advises Construction Firms on New VAT Reverse Charge Rules

London, UK, 2025-11-3 — /EPR Network/ — Allenby Accountants, a leading firm specialising in accounting and tax advisory services, is helping businesses navigate one of the most significant VAT reforms in 30 years, the Domestic Reverse Charge (DRC) for construction services, which came into effect on March 1st.

 

The new DRC system shifts VAT responsibility from the supplier to the customer within certain construction supply chains covered by the Construction Industry Scheme (CIS). Instead of subcontractors charging VAT, the responsibility now lies with the contractor receiving the service to account for VAT directly to HMRC.

 

According to Allenby Accountants, the reform is designed to combat VAT fraud within the construction sector, estimated to cost the UK Treasury over £100 million annually. The change affects a broad range of construction operations, including building, alteration, repair, extension, and demolition projects, though architectural, surveying, employment agency, and zero-rated services remain excluded.

 

“This is a fundamental change to how VAT operates in construction,” said a Amit Gupta, Director at Allenby Accountants. “Businesses must now ensure their accounting systems, invoicing processes, and contracts reflect the new rules. Incorrect VAT treatment could result in non-recoverable charges from HMRC.”

 

The firm highlights key steps for contractors and subcontractors:

• Verify customers’ VAT and CIS registrations before applying the reverse charge.
• Update invoicingto indicate “Reverse charge: Customer to pay VAT to HMRC.”
• Train staffto identify when DRC applies.
• Review contractsto clarify VAT responsibilities.

 

For subcontractors, the change could affect cash flow, while main contractors may benefit from improved liquidity. Allenby Accountants advises affected firms to consider monthly VAT returns to mitigate cash flow issues.

 

About Allenby Accountants

A London-based accounting firm, Allenby Accountants, offers specialised services to businesses across a range of industries, including restaurants, SMEs, and contractors. With a focus on client-first methods and technology-driven solutions, Allenby Accountants helps businesses achieve long-term growth, efficiency, and compliance.

 

For expert guidance on VAT compliance and construction accounting, visit https://www.allenbyaccountants.co.uk or contact Allenby Accountants directly.

 

Company Address:

Address: Brook House 54a, Cowley Mill Road Uxbridge UB8 2FX

Phone No: 0208 914 8887

E-mail: info@allenbyaccountants.co.uk

Website: https://www.allenbyaccountants.co.uk/