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VAT Reverse Charge in Construction & End Users

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I am very new to the VAT Reverse Charge scheme that is being introduced in the construction industry on 1st March 2021 and I am confused with the end user status.

I have seen the flowchart prepared by HMRC that we would have to use for each contract to determine whether we should apply VAT Reverse Charge in each case and it seems quite straightforward, but it's determining who is the end user that confuses me. Although I've seen that our customers should in fact send us a notification of their status and we need to keep this as part of our business records.

Please could someone tell me, if I understand this correctly?

For example, let's say that all parties involved are VAT & CIS registered and the supplies are either standard or reduced rated. We are a subcontractor manufacturing timber products and we also subcontract people to install these products on sites for our contractors. Does this mean that our subcontractors would have to apply the VAT Reverse Charge when they invoice us, because we are not the end user, and then we would have to account for it? And does this also mean that we would have to apply VAT Reverse Charge when invoicing our contractors that AREN'T end users OR apply normal VAT rules if our contractors ARE end users? 

Thanks in advance!

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By lionofludesch
29th Jan 2021 06:55

Everyone is very new to the Reverse Charge.

But you seem to gave grasped it perfectly.

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Jason Croke
By Jason Croke
29th Jan 2021 08:18

The flowchart you refer to. Everyone in the supply chain should read it, not just you.

That's the best approach to take and ensure your customers and your sub-contractors read the flowchart as part of the signing contracts stage so that everyone is aware at the start that reverse charge will or will not apply.

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