VAT Domestic Reverse Charge

A straightforward guide to VAT Domestic Reverse Charge!

VAT Domestic Reverse Charge

From the 1st October 2019 there will be a radical change to the way VAT is collected for some businesses. If you are a business or individual registered for VAT and work in the building and construction industry, this change is likely to affect you. Whether you are an existing client or not, we are happy to discuss if this will affect your business.

The new VAT changes do not affect consumers, only businesses and individuals registered for VAT.

The fundamental change with the VAT Domestic Revers Charge is, the customer receiving the service will be responsible for pay the VAT to HMRC rather than paying the supplier of the service or product.

HMRC states you will need to apply the reverse charge if the following services are supplied :

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours
  • pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
  • painting or decorating the inside or the external surfaces of any building or structure
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

With the following services excluded from the reverse charge :

  • drilling for, or extracting, oil or natural gas
  • extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose
  • manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site
  • manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site
  • the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants
  • making, installing and repairing art works such as sculptures, murals and other items that are purely artistic
  • signwriting and erecting, installing and repairing signboards and advertisements
  • installing seating, blinds and shutters
  • installing security systems, including burglar alarms, closed circuit television and public address systems

This information was published by HMRC, and is of course subject to change.

You can find the latest updates and more information on the HMRC website

If you have any questions at all concerning VAT Domestic Reverse Charge, or any other taxation issue, please do contact us today