The reverse charge and the Construction Industry Scheme

From 1st March 2021, VAT registered subcontractors will no longer charge VAT on certain construction services provided to contractors. 

Instead, the customer (contractor) will ‘self-account’ for any VAT due – this is known as the reverse charge.

This means the subcontractor, would not show any VAT on their invoice to the contractor but instead notate on the invoice that it is ‘subject to the Reverse Charge’. The contractor would reclaim VAT as normal but would also show the VAT due on their VAT return; rather than the subcontractor declaring it on their VAT return.

The reverse charge will only apply to standard and reduced rated services, so zero rated services are unaffected.

More information on this can be found here. 

We would be happy to discuss your affairs in more detail and can look after your bookkeeping needs and/ or complete your VAT return for you.

We can also look after your CIS returns to HMRC and supply payment and deductions statements to your subcontractors.  

Please get in touch today to arrange a free consultation to discuss your needs, feel free to call us on 01224 637100 or use our simple online contact form.

Date published 2 Aug 2019 | Last updated 18 Nov 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.