Domestic reverse charge VAT legislation

The Domestic reverse charge VAT legislation is a change in the way Construction Industry Scheme (CIS) registered construction businesses handle and pay VAT. It is being introduced in the UK from 1 March 2021.

It affects VAT registered construction businesses who supply or receive construction and building services that are reported under the CIS).  It means the customer (contractor) will be responsible for the VAT due to HMRC instead of the supplier (subcontractor).

Reverse charge

The measure will mean that for certain supplies of construction services (‘specified services’) the customer will be liable to account to HMRC for the VAT in respect of those purchases rather than the supplier (the ‘reverse charge’). The reverse charge will apply through the supply chain where payments are required to be reported through the Construction Industry Scheme (CIS) up to the point where the customer receiving the supply is no longer a business that makes supplies of specified services – these businesses are referred to as ‘end users’. Where the service is being supplied to the ‘end user’ VAT must be charged in the normal way.

End users

For reverse charge purposes consumers and final customers are called end users. They are businesses, or groups of businesses, that are VAT and CIS registered but do not make onward supplies of the building and construction services supplied to them.

The reverse charge does not apply to supplies to end users where the end user tells their supplier or building contractor in writing that they’re an end user.

When you must use the reverse charge

You must use the reverse charge for the following services:

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
  • painting or decorating the inside or the external surfaces of any building or structure
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunneling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works


Our Position

As our services are not in line with CIS and we do not provide any labour element as part of our sales, we will be classed as an ‘end user’ from a supplier’s point of view. Therefore, the reverse charge will not apply to us.

Please see the link below for further information: