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VT Transaction+

Navigation: Value Added Tax > Domestic reverse charge VAT for construction services

Sales by subcontractors

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Introduction

If you make a sale subject to the domestic reverse charge, you should not charge the customer VAT on the sale, but the net value of the sale needs to be included in Box 6 on your VAT return.

Entering sales subject to domestic reverse charge in VT Transaction+

Entering a DRC sales invoice

Raising a DRC sales invoice

Authenticated tax receipts

If you have used authenticated tax receipts for your sales, rather normal VAT invoices, you can use the REC transaction to record the sales. Select No VAT in the VAT Output field.

Completing your VAT return

As the sub-contractor/supplier, you will not be charging output VAT on the supply. Therefore, no output VAT on the sale should be included in Box 1 of the VAT return. However, the net value of the sale is required to be included in Box 6.

When generating the VAT return, this will occur automatically if you have recorded the sales as described in this section.

Sales to non-VAT-registered customers

The domestic reverse charge does not apply to sales made by a subcontractor to a customer who is not VAT-registered or is not liable to be registered for UK VAT. In this case, VAT should be charged in the normal way, by the subcontractor.