The following information is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. To determine the VAT treatment for your particular transactions please refer to HMRC guidance or seek tax advice from an accountant.
Introduction
The domestic reverse charge for building and construction services requires UK VAT registered contractors to account for output VAT on certain types of construction services supplied to them by UK VAT registered sub-contractors, subject to certain conditions.
Normally, a supplier charges output VAT to a customer on a sale and the supplier then pays the VAT to HMRC. However, for domestic reverse charge services, the customer (the contractor) accounts for the output VAT and pays it to HMRC, rather than the supplier (the sub-contractor), hence the term reverse charge.
Input VAT is also reclaimable by the customer on the same transaction (provided they can fully recover input VAT).
To account for domestic reverse charge VAT in VT Transaction+
Please refer to the help topic relevant to your particular situation:
Purchases by contractors (if on cash accounting)
Sales by subcontractors (if on cash accounting)
•Entering a DRC sales invoice (if on cash accounting)
•Raising a DRC sales invoice (if on cash accounting)
Creating a sales invoice template for the domestic reverse charge
Please refer to Creating an invoice template for DRC services
