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Domestic reverse charge for the construction industry

25 February 2021 • HMRC News

If you buy or sell services in the Construction Industry Scheme the way VAT is collected from invoices, is changing from 1 March 2021.

The new domestic 'reverse charge' is an anti-fraud measure that shifts the liability for accounting for output VAT from the supplier (the “Intermediary Supplier”) to the customer (the “End-user). For those working in the construction industry this will now apply to invoices that would normally fall within the scope of CIS.

Who pays the VAT?

In effect intermediary suppliers receiving a service will pay VAT directly to HMRC instead of paying the supplier.

For VAT registered companies paying to receive building or construction services under the new domestic VAT reverse charge their ‘customer’ or ‘end user’ now accounts for the VAT.

Essentially it means a customer will receive an invoice from a supplier net of VAT, however the VAT is still liable to be paid directly to HMRC and not the supplier. The new regulations do not affect the ‘end user’ so normal VAT rules will continue to apply, this is your obligation.

Written Notification 

To ensure all intermediary suppliers understand their status businesses and what supplies are covered needs to be outlined in written documentation. This can be obtained in writing, either via a contract, an email or letter.

Applying the changes

As the new legislation comes into force from 1st March 2021 any projects that include construction services will now be subject to the VAT reverse charge. Below is handy flow chart outlining the process. 
If you would like to discuss how this affects your business we would be happy to discuss this further with you, or you can visit

For more information, contact us on 020 7731 6163 or email

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