Reverse charge in building and construction services - time for review

The reverse charge for building and construction services will be introduced from 1 October 2019. In order to avoid potential penalties in the future, now is a good time to review policies and systems to test they are robust enough to deal with the reverse charge and able to communicate the new rules to subcontractors, thereby ensuring they also comply.

Given the requirements, it’s also an opportunity to review other business processes that either require (or would benefit from) assurance from downstream partners, sub-contractors and agents. For example, although introduced in 2010, we are still seeing examples of companies failing to meet the Ministry of Justice’s Bribery Act guidance, which stipulates that agents should be made aware of (and agree to adhere to) the  company’s anti-bribery stance, policies and procedures. 

In addition to regulatory and legal requirements, it makes perfect sense to drive compliance through supply chains, given the wide range of sub-contractors’ and agents’ risks that can impact on finances and reputation. These can include:

• risk management framework too broad or not properly implemented;
• poor record keeping, inadequate filling systems;
• weak conflict of interest policies and monitoring;
• inadequate due diligence and background checks undertaken on staff required;
• lack of transparency and appropriate quotations in procurement;
• insufficient quality assurance on suppliers and goods;
• lack of competitive prices;
• no efficient system for reporting fraud, bribery and corruption.

Having robust polices and Standard Operating Procedures that can be imposed on a supply chain will go a long way to ensure that companies and their subcontractors are operating in a like-minded manner and share ethical, legal and regulatory requirements.

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