//Domestic reverse charge for supplies of building and construction services
The domestic reverse charge for supplies of building and construction services will take effect from 1 March 2021.
Key points
• With effect from 1 March 2021, certain construction industry services supplied to a VAT-registered customer will no longer need to have VAT accounted thereon.
• Instead the customer will account for VAT under a “reverse charge” arrangement. The customer will account for VAT as if he had himself made the supply to himself and will also recover the same VAT as input tax subject to the normal restrictions, etc. The effect is to remove any risk that VAT is reclaimed by one party and not paid over by the other. The new Domestic Reverse Charge applies only to supplies which would otherwise be subject to VAT at the standard or reduced rate. It does not, for example, apply to zero-rated supplies or supplies made by someone who is not VAT registered. The services to which the new rules apply (construction services) are the same services to which the Construction Industry Scheme (CIS) applies. They thus extend not only to construction but to alteration or repair of buildings, some types of electrical and plumbing work, site clearance etc. The new scheme also applies to goods or materials supplied in conjunction with construction services.
The new Building and Construction Domestic Reverse Charge applies only to services that are made to a contractor: it does not apply to an “end user” customer.
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