VAT Reverse Charge Calculator (Construction)

The VAT domestic reverse charge for building and construction services, introduced on 1 March 2021, changed how VAT is handled on most standard- and reduced-rated construction supplies between VAT-registered, CIS-registered businesses. Instead of the supplier charging VAT and receiving it in cash, the customer accounts for the VAT directly to HMRC — as both output tax (what they owe) and, subject to their normal recovery position, input tax (what they can reclaim) on the same VAT return. The supplier still invoices for the work but does not add VAT to the amount they collect. This calculator shows the practical cash difference this makes. Enter the net (ex-VAT) invoice value and the applicable VAT rate, and choose whether the reverse charge applies to this supply. If it does, the calculator shows that the supplier receives only the net amount — the VAT shown on the invoice is for information only and is never paid to the supplier — while the customer self-accounts for that VAT amount. If the reverse charge does not apply (for example because the customer is an "end user" who has confirmed that status in writing, or is not VAT/CIS-registered), normal VAT rules apply and the supplier charges, collects and later pays over the VAT as usual. The reverse charge applies to supplies defined as "construction operations" under the Construction Industry Scheme — most building, civil engineering, demolition, alteration and repair work — between two VAT-registered, CIS-registered businesses, unless the customer is an end user or intermediary supplier. It was introduced to tackle "missing trader" VAT fraud, where a subcontractor collected VAT from a customer and disappeared without paying it to HMRC. Because subcontractors no longer receive VAT in cash under the reverse charge, many experienced a working-capital squeeze when the rules changed and moved to monthly VAT returns or the Cash Accounting Scheme to manage it. What this calculator does NOT model: mixed invoices with several VAT rates, the written end-user/intermediary-supplier confirmation process itself, CIS labour deductions (30%/20%/0% depending on registration status — use a dedicated CIS calculator), or partial exemption on the customer side. For standard, non-construction VAT arithmetic use the main VAT calculator; for the Flat Rate Scheme (which construction subcontractors under the reverse charge generally cannot combine with reverse-charged sales in the way they might expect) use the VAT Flat Rate calculator.