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VAT construction reverse charge

Q: My client supplies construction services, usually as a sub-contractor to a main contractor, but sometimes to the property owner direct. His sales do all fall under the Construction Industry Scheme (CIS), but my client has gross payment status. Will the new domestic reverse charge for construction services coming in from 1 October 2019 still apply to my client?

A: Yes. It applies to most sales of construction services (and materials supplied with those services) that come under the CIS "reporting" requirements; the fact that your client has gross payment status does not change this.

The new reverse charge does not apply, however, where the CIS construction service supplied by your client is direct to the "end user" or someone “connected” with the end user. An "end user" for VAT purposes is a customer that is not itself selling on the construction services. Normally the property owner would be an end user, even though for CIS purposes they may be a deemed contractor. A person is “connected” to the end user if they share a relevant interest in the land/property concerned, or are part of a corporate group with the end user.