HMRC’s domestic reverse charge for construction services came into force on 1 March 2021.

The CIS domestic reverse charge only applies to VAT-registered businesses within the construction industry. If your business is not in this industry or is not VAT registered, you can ignore the rest of this article.

These relevant works include but are not limited to:

• A wide range of construction works, including works on repairs and maintenance.
• Installation of utilities, fire and safety systems, lighting and heating works.
• Any works relating to cleaning and preparing buildings as part of the construction process.

If your business is the recipient of these services and receives an invoice with the reverse charge applied, then you account for the VAT amount as part of your overall input tax, as if you’ve charged it to yourself. 

The easiest way to establish whether or not your suppliers should be applying the CIS domestic reverse charge is to follow a flow chart, such as below:

A quick overview of the reverse charge application:

You must follow the above rules if you say yes to:

• Is the work you are providing within CIS?
• Are your charging VAT at 20% or at a reduced rate?
• Is your customer registered for VAT?
• Will your customer be reporting your work in a CIS return?
• Your customer is not an end user?

Calliope Jones MAAT