CPA Bulletin

34 CPA Bulletin > May 2021 www.cpa.uk.net Q&As: 1 q&a s As the transport of plant is not considered, in itself, a CIS activity, then it would be outside the scope of the Reverse VAT legislation. This position was confirmed by the CPA’s accountants, Barnes Roffe who contacted HMRC, and HMRC confirmed this point. I would be grateful if you could clarify the position on whether the transportation of plant comes into scope of Reverse VAT. The first question outlined in the flowchart shown on page 35, asks whether the supply falls ‘within scope of CIS’. As the CIS focuses on construction-related works, anything which does not fall into that remit - which would include quarry work - is excluded. There is no need to consider the subsequent questions in the flowchart as the first question has been answered. Consequently, the customer will be charged VAT as normal. I would appreciate it if you could clarify the position of Reverse VAT where the customer is using machines in a quarry? The nature of the supply will determine whether Reverse VAT applies or not. To initially qualify is whether the supply is a construction-related activity, i.e. does it come into scope of CIS, and in particular the types of work covered in 1.1 of CIS-340. Please see https://www.gov.uk/government/publications/construction-industry- scheme-cis-340/construction-industry-scheme-a-guide-for-contractors-and- subcontractors-cis-340 You would need to consider the subsequent questions in the HMRC flowchart shown, to see whether you would charge VAT as normal or not. Would you consider the hire of a road sweeper with a driver to potentially be subject to Reverse VAT charges? The question on whether Reverse VAT applies or not, is not only subject to whether an operator is supplied, but whether as part of the service, you are supplying personnel to erect/dismantle the tower crane. If you are offering this service, then technically you would fall into ‘scope of the CIS’ - the first question asked in the HMRC flowchart. Subject to the answers to the subsequent questions asked in the flowchart will determine whether you would charge VAT as normal or not. I would be grateful if could clarify the position for Tower Crane hire without an operator being supplied? If your customer is trying to change the nature of the relationship as a result of the introduction of this legislation, you could remind the customer that the relationship has not altered, i.e., you are still simply supplying plant to address their needs. To help with this, the CPA produced a draft template letter at www.cpa.uk.net/ clarification-on-sub-contractor-status to help explain this point. If they treat you as another supplier, then they do not need to record this as a CIS payment (one of the questions in the flowchart), and therefore normal VAT rules apply. With the introduction of Reverse VAT, one of my customers is trying to change the nature of our relationship fromsupplier/ customer to sub-contractor/ contractor. I would appreciate any assistance you can give. There have been a number of queries concerning the interpretation of the Domestic Reverse VAT legislation. Below are some example queries whichmembers have raised. Please note that these Q&As do not cover all of the rules on Reverse VAT; and we continue to develop our understanding of howHMRC implementation of the regulations impacts on the plant-hire sector. Youmay wish to take advice from your accountants on any unresolved issues.