The construction sector has lived with the VAT domestic reverse charge (DRC) since March 2021, but lately, HMRC’s attitude towards compliance has changed dramatically.

 What began as a regime introduced to combat VAT fraud, with a promise of ‘light touch’ enforcement, is now an area where HMRC teams are actively identifying errors, issuing assessments, and applying penalties with increasing confidence.

Many honest contractors and subcontractors are still grappling with the rules, and HMRC has clearly run out of patience. For businesses operating anywhere in the construction supply chain, now is the moment to get DRC compliance in order.