Domestic reverse charge ― supplies of building and construction services ― VAT compliance

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 ― VAT compliance
  • How is a change in VAT treatment dealt with?
  • How are invoices spanning 1 March 2021 dealt with?
  • Invoices for specified supplies
  • Authenticated receipts and self-billed invoices
  • Can cash accounting be used for reverse charge supplies?
  • Businesses making reverse charge supplies
  • Businesses receiving reverse charge supplies
  • Can the flat rate scheme be used with reverse charge supplies?
  • What happens if errors occur?
  • More...

Domestic reverse charge ― supplies of building and construction services ― VAT compliance

This note provides information on specific VAT compliance and accounting issues that need to be considered by businesses supplying services that are liable to the reverse charge from 1 March 2021.

This note should be read in conjunction with the Domestic reverse charge ― supplies of building and construction services ― overview, Domestic reverse charge ― supplies of building and construction services ― further considerations and Domestic reverse charge ― accounting requirements guidance notes.

How is a change in VAT treatment dealt with?

If the VAT treatment of the contract changes during the contractual period, then it may be possible that the reverse charge is no longer applicable or becomes applicable.

In these cases, the customer is responsible for notifying the supplier of their change in status, in order to enable the supplier to apply the correct VAT treatment going forward. The supplier is required to apply the revised VAT treatment from the time the customer notifies them of the change in circumstances.

If the change occurs during the invoicing period, the supplier can either:

  1. change to the new treatment for the entire invoice period, or

  2. change to the new treatment from the next invoicing period

How are invoices spanning 1 March 2021 dealt with?

The provision of building and construction services is usually treated as continuous supplies of services from a VAT perspective. As a result, it is normally the issue of an invoice that creates a tax point (it can be created by the receipt of payment if this occurs earlier). Also, under anti-avoidance provisions, there is an annual tax point if no invoices have been issued or payment received in the 12-month period. See the Buildings, construction and land ― tax points and invoicing guidance note for more information.

Invoices for specified supplies

The rules outlined in the Time of supply (tax points) guidance note will apply.

If supplies liable to the reverse charge span 1 March

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