The domestic reverse charge (referred to as the reverse charge) is a major change to the way VAT is collected in the building and construction industry. It was put into effect on October 1, 2019.
This means that customers receiving the service will have to pay VAT due to HMRC instead of paying the supplier.
It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers).
This will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).
What do contractors need to do?
If you're a contractor, you'll need to review all your contracts with sub-contractors to decide if the reverse charge will apply to the services you receive under your contracts. You'll need to notify your suppliers they do.
What do sub-contractors need to do?
If you're a sub-contractor, you'll need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end-user or intermediary supplier.