CHECKLIST
Reverse Charge Invoice
What has to be true before you quote, what has to be on the invoice, and what goes in which box afterwards. About thirty minutes the first time with a new customer, then a minute on every invoice after that.
- Five sections, eighteen checks, thirty minutes
- The six conditions, and the one you have to ask them for
- Which VAT return box takes what, on both sides
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Who this checklist is for
Subcontractors invoicing under the domestic reverse charge who would rather get the end user question answered at quoting stage than after the invoice is queried.
You are not sure whether to charge VAT on a job
Six things all have to be true for the charge to apply. The work has to be construction services within CIS, you both have to be VAT registered, the customer has to be CIS registered, the supply has to be standard or reduced rated, and they must not have told you they are an end user.
Your customer has never told you what they are
An end user notification has to be in writing, by post, by email or in the contract. Until it arrives the reverse charge applies and you must not charge VAT. The information sits with them and the risk of getting it wrong sits with you.
You are in a repayment position every quarter
If your sales carry no VAT and your materials do, that is the arithmetic of a repayment claim, quarter after quarter. Moving to monthly returns gets it back three times as often rather than lending it to HMRC.
FACTS
What HMRC accepts on the invoice
A note making clear the charge applies and that the customer accounts for the VAT. Wording HMRC accepts includes VAT Act 1994 Section 55A applies, or Customer to pay the VAT to HMRC. Show the rate or the amount they must declare, and do not add it to the total they pay you.
18 checks
Five sections
5 per cent
The disregard, if you both agreed up front
FACTS
The exception that has to be agreed at the start
Where the reverse charge element is five per cent or less of the whole supply it can be ignored and normal VAT rules apply to all of it. Both sides have to have agreed that from the start of the contract, which means raising it before you sign rather than when the first invoice is disputed.