Jurisdiction(s):
United Kingdom

Key definition

Reverse charge definition

What does Reverse charge mean? A VAT accounting mechanism in which the customer, not the supplier, accounts for VAT on a supply. In practice, the supplier issues an invoice without charging VAT and states that the reverse charge applies; the customer self-accounts for output tax and, if entitled, claims the corresponding input tax. This is broadly cash‑flow neutral for fully taxable businesses but affects partially exempt or unregistered customers and carries compliance and invoicing risks. The reverse charge is provided for in legislation (UK: Value Added Tax Act 1994 and secondary legislation; Ireland: VAT Consolidation Act 2010 and related regulations) and is applied by HMRC and...

UK VAT on Building and Construction Works: Zero/Reduced Rates, Reverse Charge, Dwellings, RRP/RCP, Conversions, Empty Homes, Energy-saving Materials, Disability and Charity Reliefs, Housing Associations, Refund Schemes

Published by a LexisNexis Tax expert

Practice notes

This Practice Note is about the .

More specifically, it considers which categories of building work qualify for VAT relief, either through zero rating or by applying the reduced VAT rate. To benefit from relief, there must be both an appropriate kind of building and an appropriate scope of work. Why is that important? This is, naturally, significant to those undertaking it, but it also feeds into project appraisals, and influences whether development and investment prospects are viable. If the VAT is ultimately recoverable, it might appear unimportant whether the contractor charges it. However, even then it is crucial to ensure the correct reliefs are used, as HMRC will not reimburse VAT that should never have been paid. A final consideration is that businesses commissioning construction may, in some cases, need to account for VAT themselves under a ‘Reverse charge’...

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Martin Scammell

Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property.Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds.He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as...

Web page updated on 22/05/2026

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