Domestic reverse charge ― supplies of building and construction services ― overview

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Domestic reverse charge ― supplies of building and construction services ― overview
  • Background
  • What issues need considering when preparing for the introduction of the reverse charge?
  • Monthly VAT returns
  • Contracts spanning 1 March 2021
  • When must the reverse charge be used?
  • What supplies are included?
  • What supplies are excluded?
  • What is the VAT treatment of supplies made to end users and intermediary supplier businesses?
  • End users
  • More...

Domestic reverse charge ― supplies of building and construction services ― overview

This guidance note provides an overview of the scope of the domestic reverse charge applied in respect of certain supplies of building and construction services. This note should be read in conjunction with the Domestic reverse charge ― supplies of building and construction services ― further considerations and Domestic reverse charge ― supplies of building and construction services ― VAT compliance guidance notes.

See also the Domestic reverse charge ― accounting requirements guidance note for details regarding what information needs to be shown on the VAT invoice and how to account for the reverse charge.

Background

The reverse charge only applies to work carried out for another builders, where the builder recharges the building services received as part on an onward supply. The reverse charge does not apply to supplies to end users or intermediary suppliers.

The domestic reverse charge for construction and building services came into effect from 1 March 2021.

Guidance has been provided on how to deal with supplies that span the implementation date and with invoices and credit notes that also span the date. See the Domestic reverse charge ― supplies of building and construction services ― VAT compliance guidance note.

What issues need considering when preparing for the introduction of the reverse charge?

If the services provided come within the scope of the reverse charge, the following should be considered, when preparing for the introduction of the reverse charge:

1Review contracts and orders to confirm which supplies will be subject to the reverse charge (this applies to both sales and purchases)
2Inform relevant customers that the supplies will be subject to the reverse charge
3Confirm with customers whether they are an end user or intermediary supplier
4Ensure that accounting systems and software are updated to deal with the reverse charge. Accounting software / tax engines / invoicing software must be able to distinguish between reverse charge services and services liable to

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