Domestic Reverse Charge
The Domestic Reverse Charge for building and construction services
The Domestic Reverse Charge (“DRC”) came into effect on 1 March 2021, and changed the way VAT is collected in the
building and construction industry. The DRC makes the VAT registered customer responsible for accounting for VAT due on affected supplies, rather than the supplier. This is a mandatory charge. It is not optional.
The DRC only applies to you if you are VAT registered in the UK and you either receive or supply services within the scope of the Construction Industry Scheme (CIS). This only applies in respect of supplies between VAT registered contractors, it does not apply to ‘end user’ customers (e.g. home owners). The DRC only applies to standard rated and reduced rated supplies. Zero rated supplies will continue to be dealt with under the current system.
Read our fact sheet to find out more about the Domestic Reverse Charge, along with some commonly asked questions and answers.