Free UK trade checker
This checks the UK domestic reverse charge for building and construction services, not the reverse charge for overseas services. Answer seven questions for a cautious result, and if it likely applies, see the VAT the customer accounts for. Nothing you enter is stored or sent anywhere.
Checked against HMRC
Result on the answers given
Nothing has been answered yet. Choose Not sure wherever you are not certain: the checker will not push you into a Yes or No.
General information based on the answers you give, not personalised tax advice. Nothing you enter is stored or sent anywhere.
HMRC's guidance for suppliers and customers sets out the same conditions. The reverse charge applies from 1 March 2021 to certain building and construction services when all of these are true:
Where it applies, the customer accounts for the VAT on their own VAT Return instead of the supplier charging it. HMRC advises suppliers to ask the customer whether they are registered for VAT and for CIS. Not all construction work is reverse charged, and a failed condition does not by itself tell you what VAT treatment does apply.
Where the reverse charge applies, VAT Notice 700/12 tells suppliers to fill in box 6 and customers to fill in boxes 1, 4 and 7.
| Who | VAT Return box | What goes in it |
|---|---|---|
| Supplier | Box 6 | Value of the supply. |
| Customer | Box 1 | Output VAT: the reverse-charge VAT the customer accounts for. |
| Customer | Box 4 | Input VAT: the same VAT, reclaimable subject to the customer's normal VAT recovery rules. |
| Customer | Box 7 | Purchase value. |
HMRC requires the invoice to include the reference “reverse charge” and make clear that the customer must account for the VAT. The amount of VAT due under the reverse charge should be clearly stated on the invoice, but not included in the amount shown as total VAT charged.
HMRC does not prescribe one form of words. Its guidance gives examples such as “reverse charge: VAT Act 1994 Section 55A applies”, “reverse charge: S55A VATA 94 applies” and “reverse charge: Customer to pay the VAT to HMRC”. Treat these as examples, not the only acceptable wording, and check the current guidance in section 06 before relying on them.
The checker returns an edge-case result, with no VAT figure, whenever an answer is Not sure or one of these is flagged. A confident answer here would be a guess.
HMRC allows an optional concession where a single supply contains only a minor reverse-charge element worth 5% or less of the whole supply. Supplier and customer must agree from the start of the contract, using the overall contract values rather than testing invoice by invoice. This is not the 5% reduced VAT rate.
HMRC has a different 5% rule for a VAT-registered customer that is predominantly an end user but re-supplies less than 5% by value. The customer may still choose to issue an end-user declaration. This is separate from the minor-element concession above, and this checker does not decide eligibility for either one.
HMRC says that where goods are supplied with construction services, this is a single supply for VAT purposes. Whether a particular job is one supply or several is a classification question the checker does not answer.
Separate labour and materials contracts for the same site can be treated as one VAT supply where they are linked. The checker cannot tell from a handful of answers whether contracts are linked.
The minor-element 5% concession does not apply where there is a single supply and the predominant element is zero-rated. If a job mixes zero-rated and other work, get the treatment confirmed rather than relying on a simple yes or no.
Supplies of staff or workers by an employment business are excluded even where they are reported within CIS. Deciding whether a business is acting as an employment business for a given supply is beyond this tool.
These exclusions depend on the customer notifying the supplier in writing. The checker only asks whether that written notification exists. It does not decide whether a customer qualifies as an end user or intermediary supplier.
Whether work qualifies for zero-rating (for example on a new dwelling) or the reduced rate has its own conditions. The checker takes your stated rate as given and treats Not sure as an unresolved question.
Transactions that are subject to the domestic reverse charge are excluded from the VAT Cash Accounting Scheme and must be accounted for under the reverse-charge rules. A business can still use cash accounting for other qualifying supplies and purchases.
Checked against these GOV.UK and HMRC pages only. This is general information, not personalised tax advice. HMRC guidance can change, so check the current pages for your own contract.