VAT Reverse Charge - Construction services

Aktualizacja: maj 14

In this article you will find:

  1. What VAT Reverse Charge is?

  2. Who will be responsible for paying VAT?

  3. What does this mean for Subcontractors?

  4. Who is this affected?

  5. How to issue an invoice and an sample.

VAT Reverse Charge is effected from March 1, 2021.

This is a new method of VAT payment by construction companies registered for VAT.

This means that VAT will not be paid to the subcontractor as usual but

will be paid to HMRC directly by the Client.

Clients will not pay VAT to Subcontractors. They will pay net rates only

The Customers will be responsible for paying the VAT to HMRC.

The Subcontractors will not have to include output vat (sales) in their VAT return, but will still be able to include input vat (purchase), so they will still be able to receive a VAT refund for the costs incurred.

Companies using VAT Cash Accounting Scheme must use traditional vat for the services that are subject to VAT Reverse Charge.

What must be included on the Invoice?

  1. Standard information.

  2. Information that you apply VAT Reverse charge ("domestic reverse charge applies")

  3. Information that the customer is responsible for paying the VAT ("customer is required to account for the VAT")

  4. VAT amount or rate.

  5. The VAT amount cannot be included in the gross amount

Sample invoice

Invoice Sample VAT Reverse Charge
Download PDF • 235KB

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