What is it?

Domestic Reverse Charge is a method of handling VAT between the Supplier and the Customer. Here, the Supplier of the goods or services will no longer charge the VAT to its Customer and the Customer becomes responsible for accounting the VAT to HMRC.

Who does it apply to?

Both the Supplier and Customer need to be VAT registered in the UK in order to apply the DRC procedure. If any of the two entities is not VAT registered, standard VAT rules apply. Click here to see the goods and services the reverse charge is applied to.

In the DRC procedure, the usual treatment of VAT is changed. Instead of the Supplier, the Customer receiving the goods or services will be accounting for the VAT due to the HMRC.

VAT Reverse Charge for Building and Construction Services (from 1st March 2021)

According to HMRC guidelines, changes are coming to the CIS sector from the beginning of March 2021. This particular change will be that the VAT reverse charge must be used for most supplies of building and construction services. Follow this flowchart to work out whether the reverse charge is to be applied or not.