We explain the vat domestic reverse charge in plain English, handle it correctly, and make sure you claim every relief you are entitled to, all at a fixed fee.
The VAT Domestic Reverse Charge
The domestic reverse charge changed how VAT works on most construction services between VAT-registered contractors and subcontractors, the customer accounts for the VAT rather than the supplier charging it, which affects invoicing and cash flow.
We set up your invoicing and VAT returns correctly for the reverse charge, whether you are a contractor or subcontractor, so you neither charge VAT wrongly nor miss accounting for it, and we protect your cash flow.
The reverse charge means subcontractors no longer receive the VAT on their invoices, which hit many businesses' cash flow when it came in. Getting the invoicing and returns right avoids errors and penalties.
The Detail That Matters
The domestic reverse charge changed how VAT works on most construction services between VAT-registered contractors and subcontractors: the customer accounts for the VAT, not the supplier. It hit subcontractors' cash flow hard, and errors bring penalties.
For specified construction services between VAT-registered businesses under the Construction Industry Scheme, the customer accounts for the VAT on their own return rather than paying it to the supplier. Subcontractors no longer add VAT to their invoices to contractors.
Because subcontractors no longer receive the VAT element on their invoices, many lost a cash-flow buffer they had relied on. Moving to monthly VAT returns can help those regularly in a repayment position.
Reverse-charge invoices must state that the customer accounts for the VAT and show the VAT rate. Charging VAT when the reverse charge applies, or vice versa, causes errors and penalties, so the setup matters.
The reverse charge does not apply to supplies to end users (such as the property owner), or to non-CIS work. Identifying which of your jobs are caught is essential to invoicing correctly.
The reverse charge is widely misapplied, VAT charged when it should not be, or not accounted for when it should, and both bring penalties, while the cash-flow hit caught many subcontractors unprepared.
Key Figures
How We Help
We set up your invoices to apply the reverse charge properly, so VAT is handled the right way on construction services.
Whether you charge or account for the VAT, we make sure your returns reflect the reverse charge correctly.
The reverse charge removed VAT from subcontractors' income. We help you plan cash flow and consider monthly returns for repayments.
All the forms, calculations and correspondence handled on your behalf, so you never have to decode HMRC's rules or sit on hold.
A clear fixed fee quoted after a free call, your position explained in plain English, and never a surprise bill.
We act quickly, and where earlier years are involved we put those right too, reclaiming refunds or minimising penalties.
The reverse charge is widely misapplied, VAT charged when it should not be, or not accounted for when it should. Errors bring penalties, and the cash-flow impact caught many subcontractors out. We get it right.
Recent Client Outcome
A CIS subcontractor was still charging VAT on invoices to contractors after the reverse charge came in, causing errors.
What we did. We corrected their invoicing to apply the reverse charge, adjusted their VAT returns, and, because they were now often in a repayment position, moved them to monthly returns.
The outcome. Their invoicing and returns became compliant, avoiding penalties, and the monthly returns improved their cash flow by speeding up VAT repayments.
Fixing the invoicing and switching the return frequency addressed both the compliance and the cash-flow sides of the reverse charge.
Why People Come to Us
Questions Answered
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