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The VAT reverse charge for building and construction services

From 1 March 2021 the domestic VAT reverse charge must be used for most supplies of building and construction services. The charge applies to standard and reduced-rate VAT services:

  • for individuals or businesses who are registered for VAT in the UK

  • reported within the Construction Industry Scheme

The Reverse Charge is being introduced in the construction industry to tackle ‘missing trader fraud’. Missing trader fraud occurs when construction companies are formed and deliver services. Rather than pay the output VAT charged on their sales to HM Revenue and Customs (HMRC), they soon close the business and disappear with the VAT they collected from their customers.


The Reverse Charge rules will mean that the VAT will no longer flow around the supply chain and is not paid until it reaches an ‘end user’ or private individual.


You must use the reverse charge for the following services:

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services

  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence

  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure

  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration

  • painting or decorating the inside or the external surfaces of any building or structure

  • services which form an integral part of, or are part of the preparation or completion of the services described above - including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works



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