Key facts
- The domestic reverse charge applies to most CIS-regulated construction services.
- The customer accounts for VAT, not the supplier.
- End users and intermediaries are excluded from the reverse charge.
- Suppliers invoice without VAT and note “reverse charge” on the invoice.
The Construction Reverse Charge
Since 1 March 2021, the domestic reverse charge applies to most building and construction services that are reported under CIS. The customer accounts for the VAT instead of the supplier.[1]
What Services Are Covered?
Services covered include:[1]
- Building, altering, repairing, extending, demolishing
- Installing heating, lighting, drainage, or other systems
- Painting and decorating
- Cleaning (internal, post-construction)
- Scaffolding, formwork, groundwork
Services not covered: architecture, surveying, project management (professional services), hiring of construction plant without an operator.
Who Is Excluded?
- End users — the person commissioning work for their own use (e.g. a homeowner, a business getting their own office refurbished)
- Intermediaries — connected to end users
- Non-CIS businesses — if the customer isn’t registered for CIS
How to Invoice
If the reverse charge applies:[3]
- Invoice the net amount (no VAT line)
- State: “Reverse charge: Customer to account for VAT to HMRC”
- Show the VAT rate that would have applied
Cash Flow Impact
Subcontractors no longer collect VAT from their customers, which can cause cash-flow issues. Plan for this and consider setting up a Cash Accounting Scheme or adjusting your invoicing cycle.
Check before invoicing: Ask your customer whether they’re an end user. If they are, charge VAT normally. If not, apply the reverse charge. Get written confirmation.
Frequently Asked Questions
What is the VAT reverse charge for construction?
Since 1 March 2021, the domestic reverse charge requires the customer (not the supplier) to account for VAT on CIS-regulated construction services. The supplier invoices without VAT and notes “reverse charge” on the invoice.
Does the construction reverse charge apply to all building work?
It applies to most CIS-regulated services such as building, repairs, painting, scaffolding, and installations. It does not apply to professional services like architecture or surveying, or to plant hire without an operator.
Who is excluded from the construction reverse charge?
End users (e.g. homeowners or businesses commissioning work for their own use), intermediaries connected to end users, and non-CIS-registered businesses are excluded from the reverse charge.
How does the construction reverse charge affect subcontractor cash flow?
Subcontractors no longer collect VAT from their customers, which can cause cash-flow issues as they still need to pay their own input VAT before recovering it on their VAT Return.
Further Reading
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