Andrew Needham looks at the introduction of the new domestic reverse charge for the construction industry.
The domestic reverse charge is a major change to the way VAT is collected in the building and construction industry.
It came into effect on 1 March 2021, and means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier. It will only apply to individuals or businesses registered for VAT in the UK. This will affect businesses that supply or receive specified services that are reported under theâ¯construction industry scheme (CIS).
Businesses must use the reverse charge if they are VAT registered in the UK, buy building and construction industry services and:
- payment for the supply is reported within the CIS;