Please respond to accounts@jsrmanagement.co.uk
Please note as from the 1st March 2021 the Domestic Reverse Charge (DRC) regime for the Construction Industry will come into effect.
This DRC has been introduced to combat VAT fraud within the Construction Industry as a whole.
VAT Rate Flow Chart are available on HMRC website https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#flowcharts
Please note any zero-rated sales are excluded from the DRC regime eg construction work on new dwellings – however work that would normally fall in the 5% or 20% VAT thresholds will fall within the DRC and will need to be reviewed for the correct VAT code to be applied.
The onus is on the customer to tell the contractor/subcontractor whether they are an ‘end user’ for any job, however it would be wise for you to review your contracts in place to ascertain whether your customer is an ‘end user’ and have that conversation with them for clarity.
When you must use the reverse charge
You must use the reverse charge for the following services:
- constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
- constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
- installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
- internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
- painting or decorating the inside or the external surfaces of any building or structure
- services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works
When you must not use the reverse charge
Do not use the charge for the following services, when supplied on their own:
- drilling for, or extracting, oil or natural gas
- extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose
- manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site
- manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site
- the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants
- making, installing and repairing art works such as sculptures, murals and other items that are purely artistic signwriting and erecting, installing and repairing signboards and advertisements
- installing seating, blinds and shutters
- installing security systems, including burglar alarms, closed circuit television and public address systems
The JSR Team
‘Continuing to support our Clients’
