Summary
Description
The VAT charge on construction services changed in March 2021, as a result of new anti-fraud rules introduced by HMRC. Sage Accounting includes features to deal with these changes.
What is VAT domestic reverse charge?
Under domestic reverse charge, businesses supplying construction services must not charge VAT where their customer is:
- Registered for VAT
- And will use the services to make an onward supply of construction services
Instead of the supplier charging VAT, the recipient of the services must self-account for VAT on the services received. We call this reverse charge accounting.
HMRC provides a list of those services where VAT reverse charge does and doesn't apply. Under the rules, if reverse charge applies to any of the services on a single invoice, you must apply reverse charge to the whole invoice. This also includes materials. To find out which services the reverse charge applies to, read HMRC's VAT reverse charge technical guide.