VAT reverse charge for construction: the checks that keep CIS contractors compliant
The domestic VAT reverse charge for construction has been in force since March 2021, and it still catches contractors out. The rule is simple in principle: when a VAT-registered business supplies construction services to another VAT-registered business for onward supply, the customer accounts for the VAT instead of the supplier. The supplier issues an invoice with no VAT charged, and the customer records both the output VAT and the input VAT on the same return. No cash changes hands for the VAT, and the scope for missing trader fraud disappears. In practice, the rule creates a string of small decisions on every invoice, and getting any one of them wrong creates a VAT error that HMRC can pick up at a compliance check. Here are the checks that keep a construction business compliant. 1. Confirm the reverse charge applies to this job The reverse charge covers specified construction services supplied between VAT-registered businesses where the customer will make an onward supply of the s...