VAT reverse charge checker for construction invoices
The domestic reverse charge applies to most VAT-registered, standard/reduced-rated construction work within CIS — unless your customer is an end user. Answer five questions and get a clear yes/no with the exact wording to put on the invoice.
1. Is the work a construction service that falls within CIS?
Construction, alteration, repair, demolition, civil engineering and similar — the same scope as the Construction Industry Scheme.
2. Are both you and your customer VAT-registered?
The reverse charge only applies between two VAT-registered businesses.
3. Is the supply standard-rated (20%) or reduced-rated (5%)?
Zero-rated work (e.g. new-build housing) is outside the reverse charge.
4. Is your customer registered for CIS (reporting under the scheme)?
The customer must report within CIS for the reverse charge to apply.
5. Is your customer NOT an end user or intermediary? (i.e. they sell the construction service on)
End users — businesses that use the building themselves rather than selling construction services on — should confirm end-user status in writing. If they have, answer No.
Guidance tool only. Full rules: GOV.UK — VAT domestic reverse charge for building and construction services.
Frequently asked questions
- What is the VAT domestic reverse charge for construction?
- Since March 2021, for most standard and reduced-rated construction services between VAT-registered businesses within CIS, the customer accounts for the VAT to HMRC instead of paying it to the supplier. The supplier invoices without charging VAT and states that the reverse charge applies.
- Who counts as an end user?
- A business (or group) that receives construction services for its own use — it doesn't sell them on as part of a further construction supply. End users should confirm their status in writing; when they do, you invoice with normal VAT, not the reverse charge.
- What must a reverse charge invoice say?
- It must make clear the domestic reverse charge applies and that the customer is required to account for the VAT, and it must state the rate or the amount of VAT due — for example: 'Reverse charge: customer to account for VAT of £2,000 at 20% to HMRC.' You do not add that VAT to the amount payable.
- Does the reverse charge apply to zero-rated work?
- No. Zero-rated construction services — such as qualifying new-build residential work — are outside the domestic reverse charge. It only applies to standard-rated (20%) and reduced-rated (5%) services.
Valegrid Flow applies the reverse charge on invoices automatically — with the exact HMRC wording and the amount the customer must account for.
See invoicing