{"id":6780,"date":"2020-06-16T16:00:52","date_gmt":"2020-06-16T15:00:52","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=6780"},"modified":"2026-01-29T10:14:03","modified_gmt":"2026-01-29T10:14:03","slug":"vat-domestic-reverse-charge-construction-guide","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/vat-domestic-reverse-charge-construction-guide\/","title":{"rendered":"A guide to the VAT domestic reverse charge for construction"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/strategy-legal-operations\/\" class=\"entry-header__link\">Strategy, Legal &amp; Operations<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tA guide to the VAT domestic reverse charge for construction\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2020-06-16T16:00:52+01:00\">16 June, 2020<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"A guide to the VAT domestic reverse charge for construction\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/vat-domestic-reverse-charge-construction-guide\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/staceymcintosh\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2018\/11\/Stacey-McIntosh-350-1.jpg\" class=\"entry-author__image\" alt=\"\" \/>\t\t\t\t<span class=\"entry-author__name\">Stacey McIntosh<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>A new VAT reverse charge system will come into play for those working in the UK\u2019s construction industry from 1 March 2021.<\/p>\n\n\n\n<p>If it applies to you, the way your handle and pay VAT might have to change.<\/p>\n\n\n\n<p>The VAT domestic reverse charge for building and construction services is an extension of the <a href=\"https:\/\/www.sage.com\/en-gb\/sage-business-cloud\/accounting\/industry\/construction\/\">Construction Industry Scheme<\/a>.<\/p>\n\n\n\n<p>The new legislation will apply to transactions that occur between VAT registered contractors and sub-contractors who are registered for the <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/what-is-cis\/\">CIS<\/a>.<\/p>\n\n\n\n<p>HMRC estimates that \u00a3100m of revenue is lost each year due to missing trader fraud. The reverse charge will aim to reduce this figure.<\/p>\n\n\n\n<p>So what do the changes mean for your construction firm and <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/vat-reverse-charge-construction\/\">how will you be affected<\/a>?<\/p>\n\n\n\n<p>The handy guide to VAT reverse charge for building and <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/construction\/\">construction<\/a> services will provide you with the information that\u2019s required to prepare you for the new legislation.<\/p>\n\n\n\n<p>Read the guide to learn about:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The VAT reverse charge: What\u2019s happening, why and when<\/li>\n\n\n\n<li>The VAT reverse charge processes for the construction industry explained<\/li>\n\n\n\n<li>When to use the reverse charge legislation<\/li>\n\n\n\n<li>How to get your construction business ready<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"#gate-f9d0a2be-7817-4d7f-a428-0530cd8b6210\">Download your free copy of The handy guide to VAT reverse charge for building and construction services<\/a><\/div>\n<\/div>\n\n\n\n<p>Here\u2019s an excerpt from the guide.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-vat-reverse-charge-what-why-when\"><strong>VAT reverse charge: What, why, when<\/strong><\/h2>\n\n\n\n<p>In 2017, the UK government announced new legislation to combat VAT fraud seen in the construction industry.<\/p>\n\n\n\n<p>The goal is to cut down on \u2018missing trader\u2019 fraud where the companies receive high net amounts of VAT from their customers and then go missing.<\/p>\n\n\n\n<p>The <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/vat-domestic-reverse-charge-checklist\/\">VAT reverse charge legislation<\/a> will come into effect in <a href=\"https:\/\/www.gov.uk\/government\/publications\/revenue-and-customs-brief-7-2020-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation\/revenue-and-customs-brief-7-2020-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation\">March 2021<\/a>, due to the impact of <a href=\"https:\/\/www.sage.com\/en-gb\/coronavirus\/\">coronavirus<\/a> on the construction industry, and is estimated to impact up to 150,000 businesses in the building and construction sector.<\/p>\n\n\n\n<p>The legislation is concerned with <a href=\"https:\/\/www.sage.com\/en-gb\/cp\/construction-accounts\/\">moving the VAT liability<\/a> from the supplier of a service in the construction industry to the end recipient.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-who-s-affected\"><strong>Who\u2019s affected?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The reverse charge will apply to any \u2018construction services\u2019 supplied, and any goods supplied in conjunction with them<\/li>\n\n\n\n<li>The legislation impacts businesses registered as contractors to work in the construction industry service, and end recipients of the services<\/li>\n\n\n\n<li>The services to which the reverse charge applies (e.g. construction, installation, etc) are detailed on HMRC.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-exclusions\"><strong>Exclusions<\/strong><\/h2>\n\n\n\n<p>The legislation does not apply to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Zero-rated supplies of construction services<\/li>\n\n\n\n<li>The supply of solely goods<\/li>\n\n\n\n<li>Supplies of specified services where the supplier and customer are connected in any way, and for supplies between landlords and tenants<\/li>\n\n\n\n<li>Suppliers of specified services overseas (the Construction Industry Scheme legislation is concerned with the domestic supply of services only)<\/li>\n\n\n\n<li>Where the recipient is not going to be making an onward supply of construction services.<\/li>\n<\/ul>\n\n\n\n<p><em>Editor&#8217;s note: This article was first published in August 2019 and has been updated for relevance.<\/em><\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">The handy guide to VAT reverse charge for building and construction services<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Learn about the VAT domestic reverse charge for construction, what it means for your company and how to prepare for HMRC&#8217;s VAT changes.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"##gate-f9d0a2be-7817-4d7f-a428-0530cd8b6210\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Get your free guide<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t<div class=\"single-cta__downloads\">\n\t\t\t\t\t\n\t\t\t\t\t11,561 readers have downloaded this guide\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2019\/06\/BOH_2017_X3_28501-1215x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2019\/06\/BOH_2017_X3_28501-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn about the VAT domestic reverse charge for building and construction services, and what it means for your business.<\/p>\n","protected":false},"author":346,"featured_media":6781,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[139,6,9],"tags":[161,27,28],"business_type":[4,3],"lilypad":[],"context":[],"industry":[55],"persona":[71,73,74],"imagine_tag":[82,96,109],"coauthors":[353],"class_list":["post-6780","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-free-guides-templates","category-money-matters","category-strategy-legal-operations","tag-construction","tag-tax","tag-vat","business_type-small-business","business_type-medium-sized-business","industry-construction"],"sage_meta":{"region":"en-gb","author_name":"Stacey 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