In our previous blog - VAT: domestic reverse charge for building and construction services – we explained how the domestic reverse charge would affect the building and construction services from 1^st October 2019.

In this article, we wanted to clarify the difference between an intermediary supplier and an end-user. Sub-contractors need to understand this as it affects how they pay VAT.

Definition of an end-user

Consumers and the final customers within a supply chain are defined as end-users. So, a construction company that is registered for VAT and with the Construction Industry Scheme (CIS) that does not make any onward supplies is an end-user. In this situation, the end-users must make sure that their suppliers do not apply the reverse charge to them. 

Definition of an intermediary supplier

Intermediary suppliers are also VAT registered, and CIS registered companies. They are usually connected or linked to end-users, i.e.

• They share a relevant interest in the same construction site.

• Are part of the same corporate group or undertaking as defined in section 1161 of the Companies Act 2006.

As intermediary suppliers are all connected or collaborating in some way, then the domestic reverse charge does not apply.

If you are a sub-contractor supplying goods or services to a customer, you must first check if the customer is an end-user or an intermediary supplier. Most importantly, you must record the response so that you have evidence of the status of your customer.

If any mistakes in invoicing and applying the reverse charge are found by the HMRC, the expectation is that the supplier/subcontractor must notify the customer and send a corrected invoice.

In addition to understanding the status of your customer you need to check the VAT status of the customer; you can do this on the European Commission website – check that your customer’s VAT number is valid and belongs to them.

If you are unsure whether the domestic reverse charge applies to your customers or not or you want help to adjust your invoicing processes, then please do contact us and we can offer advice. You can call 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it..