Reminder: Domestic Reverse Charge for construction and building services
News posted by Tommy Chung 4 years ago
Hi all,
A quick reminder that from the 1st March 2021, the domestic VAT reverse charge must be used for most supplies of building and construction services.
You must use the reverse charge, if you’re VAT registered in the UK, supply building and construction industry services and:
- your customer is registered for VAT in the UK
- payment for the supply is reported within the Construction Industry Scheme (CIS)
- the services you supply are standard or reduced rated
- you’re not an employment business supplying either staff or workers, or both
- your customer has not given written confirmation that they are an end user or intermediary supplier
How to use the VAT reverse charge if you supply building and construction services
Clear Books is prepared for this. Our ‘Domestic Reverse Charge VAT for construction and building services’ feature is already available to use.
This can be toggled on under Settings > Configure System > Toggle Features > VAT & Bank import tool, just tick the checkbox beside the ‘Domestic Reverse Charge’ option.
As a subcontractor, if you require to apply the reverse charge to a sales invoice you will be able select ‘Domestic Reverse Charge’ under the VAT treatment.
As a contractor, if you receive an invoice which has DRC applied, you can create a bill and select ‘Domestic Reverse Charge’ under the VAT treatment.
The system will ensure that these transactions are included in the correct VAT boxes.
For further details on how to use this within Clear Books, please see:
How to enable and use the Domestic Reverse Charge for building and construction services
For further information from HMRC, please see:
VAT reverse charge technical guide
Flow chart for subcontractors wanting to know whether to apply DRC
Flow chart for contractors wanting to know whether invoices they receive should incur DRC
Tommy
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