As you may, (or possibly not), be aware, the Construction Industry Scheme (CIS) VAT reverse charge applies to construction services from 1st March 2021.

This will apply to you or your business where you are registered for CIS & VAT. In its simplest terms it shifts the responsibility for accounting and paying the VAT to HMRC from the subcontractor to the main contractor and you must do the following:

  • If you act as a subcontractor providing services to a UK VAT and CIS registered contractor then you no longer add VAT to your invoice (zero rate).

The invoice must state (words to the effect) ‘the CIS reverse charge applies, customer to pay the VAT to HMRC’.

  • If you are the main contractor  and registered for VAT & CIS, then the invoices you receive from your subcontractors will no longer show any VAT (as above).

When you prepare your VAT return you must then apply the reverse charge so that you both declare the VAT in box 1 (VAT on sales) and reclaim the VAT in box 4 (VAT on purchases).

The software you use will contain VAT codes that will automatically do this for you, you just need to ensure that the correct VAT coding is used. If we do the bookkeeping and VAT returns for you we will ensure the correct coding of these invoices.

The relevant dates for the VAT treatment are as follows:

Invoicing to non-VAT registered customers is not affected.

Further guidance can be found at:

https://www.gov.uk/guidance/how-to-use-the-vat-reverse-charge-if-you-supply-building-and-construction-services

Should you require further help or guidance please feel free to drop me a line or give me a call.