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The VAT domestic reverse charge: practical issues

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With effect from 1 March 2021, the UK introduced a VAT domestic reverse charge for the supply of construction services. The aim of the measure is to prevent VAT fraud in the construction supply chain. The recipient, rather than the supplier, is required to self-account for VAT on ‘specified services’ received. The measure was delayed twice, yet the guidance from HMRC is still deficient and has led to confusion as to when the measure is applied, particularly for employment businesses and those involved in the hire of scaffolding and other goods. Care is also required when development sites are partially sold during the construction phase; a common feature of large housing developments.

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