Domestic Reverse Charge - What Is It?
The VAT domestic reverse charge procedure is an anti-fraud measure designed to counter criminal attacks on the UK VAT system by means of sophisticated fraud
In order to combat fraud in the VAT sector there are some domestic supplies which are subject to the reverse charge. The domestic reverse charge applies to:
• Mobile phones • Computer chips • Wholesale gas • Wholesale electricity • Emissions allowance • Wholesale telecoms services; and • Construction services (with effect from 1 March 2021, the start date has been postponed due to the covid-19 crisis).
Subject to the conditions set out below, suppliers of these goods and services should not charge VAT to VAT registered customers, instead the customer self-accounts for VAT due on the purchase via their VAT return.
Construction services with effect from 1 March 2021
The domestic reverse charge will apply to standard and reduced rated construction services from 1 March 2021 if the following conditions apply:
• The services are within the scope of the construction industry scheme (CIS); • The customer is VAT registered; • The payment will be reported under the CIS; • The customer is not an end-user (an end-user is someone who receives supplies of construction services but does not supply them on).
‘Construction services’ includes the construction, alteration, repair, extension, demolition or dismantling of buildings or structures (whether permanent or not), including offshore installations.
HMRC have published a detailed guidance note which sets out the rules regarding the domestic reverse charge for construction services, this is available here: