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Domestic reverse charge VAT - what you need to know

The domestic reverse charge VAT rules are now in force. Chris Smith, managing director at PKF Smith Cooper SP, considers the key FAQs you need to consider

As of 1 March 2021, following the introduction of the new VAT reverse charge system, a large portion of the UK’s construction industry will have to handle and pay VAT in a different way

These changes will also impact how many construction companies process VAT related transactions in their accounting system.

With effect from 1 March 2021, the domestic VAT reverse charge must be used for most supplies of building and construction services. The charge applies to standard and reduced-rate VAT services for individuals or businesses who are registered for VAT in the UK and are reported within the Construction Industry Scheme.

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