Domestic Reverse Charge VAT for the Construction Industry

This new regulation intends to cut down on ‘missing trader’ fraud – where companies receive amounts of VAT from their customers, but do not declare or pay this to HMRC.

The Domestic Reverse Charge (DRC) has been around for a while for some industries but is now is being extended and comes into force from 1st March 2021 (was originally 1st October 2019) for the construction industry.

If you’re VAT registered there are some changes you need to be aware of – carry on watching!

If you’re not VAT registered, then you don’t need to worry, just carry on as normal – happy days!

Sales between subcontractors and contractors will be subject to the Reverse Charge, unless they are sales to a contractor that’s an end user – ie, someone who uses the construction services for themselves rather than selling these as part of their construction business.