Changes to VAT Domestic Charge in October 2020

We wanted to share a brief update on the VAT Domestic Reverse Charge process for construction and building services. This change was announced last year but then delayed until October 2020.

We wrote a blog explaining more details last year, it is worth looking at this to remind yourself about the services affected and the impact for your business – VAT: domestic reverse charge for building and construction services.

You may have received a letter from HMRC with an update about your business. It was worth looking at their internal processes now so that everything is in place for later this year.

A few areas to consider are:

1. If you are a VAT registered construction or building services company registered with the Construction Industry Scheme (CIS), then this applies to you. If you receive an invoice with the reverse charge applied then you need to account for the VAT amount as part of your overall input tax, as if you have charged it to yourself.

2. The VAT reverse charge for construction services applies to both standard and reduced-rate VAT supplies. However, it does not apply to zero-rated supplies.

3. VAT reverse charge does not apply for home and domestic users. If the services are provided for non-VAT-registered individuals or other kinds of ordinary non-business individuals, then standard VAT rules apply.

4. VAT reverse charge only applies to UK companies providing construction services in the UK to VAT-registered customers. So, if you undertake work overseas, you continue to operate in the usual way.

5. You need to amend your invoices, making sure that you indicate the reverse charge that is applied. The HMRC is issuing some terminology that it expects businesses to use on invoices.

If you are a construction or building services company and you would like some more information or advice on getting ready for this change. Please do get in touch by calling 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it..