The domestic reverse charge explained
The VAT domestic reverse charge for building and construction services means that, in certain cases, the customer accounts for the VAT to HMRC instead of paying it to you. It applies between VAT-registered businesses in the construction supply chain under the Construction Industry Scheme (CIS). It never applies to work for homeowners.
Last updated September 2026 · by the TradeKwote team
When it applies
Since 1 March 2021, the reverse charge applies when all of these are true:
- You and your customer are both VAT registered.
- The work is a standard or reduced-rate building or construction service.
- Payments for the work are reported under CIS.
- Your customer isn't an end user or intermediary supplier.
When it doesn't apply
- Work for homeowners and other consumers.
- Customers who confirm in writing that they are end users, such as a business having its own premises built or improved, or an intermediary who's related to one.
- Zero-rated work, such as building new homes.
- Work for customers who aren't VAT registered.
If you're a subcontractor, check with the contractor whether they are an end user before you invoice. HMRC's guidance suggests getting this confirmation in writing.
What your invoice needs to show
You still show the VAT rate and the VAT amount on your invoice, but you don't add it to the total the customer pays you. The invoice should say clearly that the reverse charge applies, for example: "Reverse charge: customer to account for VAT to HMRC". Your customer then pays you the amount excluding VAT and accounts for the VAT on their own return.
What it means for your cash flow
Because you no longer collect VAT from the customer, you have less cash coming in. If you're mainly doing reverse charge work, you may find you're often reclaiming VAT from HMRC. Some businesses move to monthly VAT returns to get repayments faster.
Quoting reverse charge work
- Show your prices excluding VAT, with the VAT amount shown for reference only.
- State on the quote that the domestic reverse charge applies.
- Keep a record of how you confirmed your customer's status.
How TradeKwote helps
- Choose the domestic reverse charge VAT scheme in Settings.
- Quotes and invoices then show VAT at 20% for reference without adding it to the total.
- If your figures include VAT, TradeKwote works out the net amount so VAT isn't counted twice.
- TradeKwote doesn't calculate CIS deductions, so agree those with the contractor.
Frequently asked questions
Does the domestic reverse charge apply to homeowners?
No. It only applies between VAT-registered businesses in the construction supply chain under CIS.
Do I still show VAT on a reverse charge invoice?
Yes. Show the VAT rate and amount for reference, but don't include it in the total, and state that the reverse charge applies.
What if my customer is the end user?
Then the reverse charge doesn't apply and you charge VAT as normal. Get their confirmation in writing.
Does the reverse charge change CIS deductions?
No. CIS deductions still apply as before. The reverse charge only changes who accounts for the VAT.
This guide is general information for UK tradespeople, not legal, tax or financial advice. Rules can change and can differ between England, Wales, Scotland and Northern Ireland, so check GOV.UK or a professional adviser for your situation.
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