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Free tool · construction VAT

VAT reverse charge checker

The domestic reverse charge trips up more construction invoices than anything else. Answer four questions and see whether to charge VAT or apply the reverse charge, with the exact wording for your invoice.

Most site construction, installation, repair and finishing work. Not pure architecture, surveying or supply-only.
End users use the building themselves. They should confirm this to you in writing.
On this invoice
Reverse charge applies
Put this on your invoice Reverse charge: customer to account for the VAT to HMRC.

Change any answer to see how the treatment changes. When the reverse charge applies you do not add VAT to the total, your customer accounts for it.

Get the VAT right, and the invoice out the same day.

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The four conditions, in plain English

The VAT domestic reverse charge for building and construction has applied since 1 March 2021. It moves the responsibility for accounting for VAT from the supplier to the customer, to stop VAT fraud in construction supply chains. It applies to a supply when all four of these are true:

If any one of those is not met, you charge VAT the normal way.

When it applies, what to do

Do not add VAT to your invoice total. State clearly that the reverse charge applies and that the customer must account for the VAT, and show the rate or amount they must account for. A common wording is: "Reverse charge: customer to account for the VAT to HMRC." You still record the sale, you just don't collect the VAT.

The end user trap

The most common mistake is applying the reverse charge to an end user, the final owner or occupier of the building. Supplies to end users are outside the reverse charge, so you charge VAT as normal. End users should tell you in writing that they are an end user, if they don't, and you reasonably believe the reverse charge applies, you can treat it as a normal supply.

Common questions

Do I still show VAT on a reverse charge invoice?

You show that the reverse charge applies and the VAT rate or amount the customer must account for, but you do not add that VAT to the amount you're charging. The customer accounts for it on their own return.

What if only one of us is VAT registered?

Then the reverse charge doesn't apply. If you're VAT registered and your customer isn't, charge VAT as normal. If you're not VAT registered, there's no VAT to charge.

Does it apply to materials-only supplies?

No. Supply-only of building materials, without any construction service, is outside the reverse charge. It applies to construction services (which may include the materials used in doing that work).

A free tool for general guidance, not tax advice. The reverse charge has edge cases (mixed supplies, connected parties, end-user notifications). Check HMRC's guidance on the VAT domestic reverse charge for building and construction services or your accountant for anything unusual.

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