The CIS domestic reverse charge is a VAT rule for construction, in force since 1 March 2021. For most construction services between VAT-registered businesses, the supplier doesn’t charge VAT; instead the customer accounts for the output tax to HMRC and reclaims it as input tax on the same return, so there’s no net VAT cost. It applies to services within the Construction Industry Scheme.
Key points
- In force since 1 March 2021 for construction (CIS) services.
- Between VAT-registered businesses where the customer isn’t the end user.
- No VAT charged; the customer accounts for it and reclaims it.
- Supported at 20% and 5% in self-billed invoices.
When does it apply?
The reverse charge applies to specified construction services between two VAT-registered businesses where the customer is not the end user, and the supply falls within the CIS. It doesn’t apply to supplies to end users or to zero-rated construction work.
What the invoice shows
A reverse-charge invoice shows no VAT amount to pay. Instead it states that the customer must account for the VAT, and shows the rate that applies — 20% standard or 5% reduced. The net amount is still shown.
How it works with self-billing
When a contractor self-bills a subcontractor, the self-billed invoice applies the reverse charge automatically where it’s due: no VAT is added, the required wording appears, and the contractor accounts for the VAT on their own return. Apex Billing supports the reverse charge at both 20% and 5%.
This is general information, not tax advice — confirm your own position with your accountant or HMRC (see VAT Notice 700/62 on self-billing).