Free tool
Do I charge VAT, or does the reverse charge apply?
Five questions, from HMRC's own conditions. Answer them and you will know whether to put VAT on the invoice or hand it to your customer to account for.
Is your customer VAT registered in the UK?
If you are working for a householder, the answer is almost always no.
Is the work within the Construction Industry Scheme?
Construction, alteration, repair, installation and the like. Hiring out goods on their own is not.
Is the work standard rated or reduced rated?
Answer no if the supply is zero rated, as a lot of new build work is.
Are you an employment business supplying staff?
Supplying people rather than doing the work. Most trade businesses answer no.
Have they told you in writing that they are an end user or an intermediary supplier?
An end user receives the work and does not sell it on. It has to be in writing. Without it, the reverse charge still applies.
Not yet decided
Answer the five
The verdict appears here as soon as all five are answered. Nothing is sent anywhere and nothing is stored.
Two things this does not decide
If the reverse charge part is 5% or less of the whole contract, you can both agree at the start to treat the lot under normal VAT rules. That is judged across the contract, not invoice by invoice, and it does not apply where the main part is zero rated.
There are other exclusions, including hiring out goods on their own and work on a utility’s own network. This is a checker, not tax advice. The full rules are in HMRC’s technical guide, and your accountant knows your contracts.
Why this catches people out
The reverse charge is not something you opt into. If the conditions are met it applies, whether or not anybody mentioned it, and the invoice is wrong if it does not say so. The two that cause the arguments are the end user rule, because it only counts in writing, and zero rated new build, because it takes the whole job back out again.
Working for a householder
They are not VAT registered, so the reverse charge cannot apply. Charge VAT as normal. This is most domestic work.
Subcontracting to another firm
Both VAT registered, work within CIS, standard rated, and they have not written to you as an end user. The reverse charge applies and you do not charge VAT.
Working direct for a developer
Often an end user, because they are not selling on construction services. Get it in writing and keep it, because the written notice is what takes you out.
Belo does the rest of the paperwork too
It answers the calls you miss, drafts the quote off your own prices, raises the invoice and chases the money, with you approving anything that goes to a customer.