Domestic Reverse Charge

Delay in the implementation of the domestic reverse charge


The domestic reverse charge has been introduced by the government to reduce VAT fraud in the construction sector. Originally this legislation was to be introduced in October 2019, however due to concerns from public bodies, this has been delayed to October 2020, providing more time to companies to understand the legislation.

The domestic reverse charge changes the way VAT is collected in certain construction services. Services affected are building and construction services, which have to be reported under the CIS scheme. Customers receiving the service will have to account and pay the VAT instead of the supplier. The supplier will also be responsible for dealing the VAT.

Who does it apply to

It will apply to VAT registered businesses in the UK, who are making standard rated or reduced rated supplies. It will not apply to exempt or zero rated supplies, or where the user is not registered for VAT (such as private customers)

The domestic reverse charge will apply only to ‘construction operations’ that need to be reported under CIS. These include:

  • Construction, alteration, repair, extension, demolition or dismantling of buildings or structures (whether permanent or not), including offshore installations.
  • Construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence.
  • Installation in any building or structure of systems of heating, lighting, air conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection.
  • 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 internal or external surfaces of any building or structure
  • Operations which form an integral part of, or are preparatory to, or are for rendering complete such operations as are previously described in this subsection, 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.


The following are not construction operations:

  • Drilling for, or the extraction of, oil or natural gas.
  • Extraction (whether by underground or surface working) of minerals and tunnelling or boring, construction of underground works for this purpose.
  • Manufacture of building or engineering components or equipment, materials, plant or machinery, or delivery of any of these things to the site.
  • Manufacture of components for systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection, or delivery of any of these things to site.
  • The professional work of architects or surveyors, or of consultants in building engineering, interior or exterior decoration or the laying-out of landscape.
  • The making, installation and repair of artistic works, being sculptures, murals and other works which are wholly artistic in nature.
  • Sign-writing and erecting, installing and repairing signboards and advertisements.
  • Installation of seating, blinds and shutters.
  • Installation of security systems, including burglar alarms, closed circuit television and public address systems.