Guide to VAT Reverse Charge for Construction Services

The new “reverse charge” system of VAT accounting started on the 1st March 2021 and affects sub- contractors supplying their services to main contractors in the construction sector.

Under the new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain are no longer invoiced in the normal way. Under the new reverse charge system, the sub-contractor does not show VAT on their invoice to the main contractor and does not account for output VAT on that transaction.

Please contact us if you need help understanding this new system.