Domestic Reverse Charge 3: Verifying suppliers and customers

Neil Warren has advice on how to check whether your customers and supplies are genuine and have made the necessary registrations so you can apply the domestic reverse charge.

26th Jan 2021
Independent VAT Consultant
Columnist
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The new domestic reverse charge (DRC) rules for the construction industry are due to commence on 1 March 2021.

A common mistake will be that a builder selling services doesn’t charge VAT when he should do, or a buyer pays VAT to a supplier when the reverse charge should apply. HMRC has the power to correct such anomalies in both cases by raising an assessment, so there is a big incentive to get the VAT treatment right first time.

If a customer is incorrectly charged VAT by a builder when the reverse charge should apply, he must ask him for a VAT credit to correct the situation.

Supplier checks

A builder selling construction services must first be sure that his customer is both CIS and VAT registered.

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