Are you prepared for the new domestic VAT reverse charge for construction services?

What is the VAT reverse charge for building and construction services?

The VAT reverse charge shifts the obligation to account to HMRC for output tax on a supply from the supplier to the customer.

From 1 March 2021 the charge must be applied to standard and reduced-rate VAT services:

  • for individuals or businesses who are registered for VAT in the UK
  • reported within the Construction Industry Scheme (CIS)

These new rules are being introduced as an anti-fraud measure to prevent a supplier being paid VAT for goods and services supplied and then ‘running off’ with it before it’s declared to HMRC.

Action you can take to be ready by 1 March 2021

Reverse Charge Flowchart

*Note A, B, and C can be found at the end of page 4 of the Note on the construction sector VAT reverse charge

More information on VAT reverse charge

Further information can be found on the GOV.UK website using the following links: