If you haven’t already heard the Domestic Reverse Charge legislation comes into effect from 1st March 2021.

This applies to standard and reduced rate services:

  • For individuals or businesses who are registered for VAT in the UK
  • Reported within the Construction Industry Scheme (CIS)

A vital part of this legislation is that invoicing is changing, and it must be done correctly.

It is important to remember that the invoice must clearly state the transaction is subject to the reverse charge. This includes any Labour or Materials which are subject to the reverse charge.

The biggest change in your invoicing is that the VAT should not be included in the amount charged to the customer.

What will change?

Previously, an example of invoicing would have been set out like this:

The new layout must look something like this:

What if I am an end user?

If you are an end user it is important to remember invoicing will not change for you as domestic reverse charge does not apply to you, you can charge VAT to your customer, but you must pay this to HMRC.

However if you are the end user or you are providing to an end user this must be communicated in writing.

If you want to read more about the Domestic Reverse Charge read our previous blog here.

If you’re still unsure or need more advice with invoicing, please contact us we are here to help.