Term
Reverse charge: what the term means
A VAT mechanism under which the business receiving a supply, rather than the supplier, accounts for the VAT due.
A VAT mechanism under which the business receiving a supply, rather than the supplier, accounts for the VAT due.
Reverse charge in practice
Under the reverse charge, the customer calculates and declares the VAT on a supply instead of the supplier charging it. For services, it applies when a UK business receives certain services from a supplier in another country: the business accounts for the VAT on its own return and, if entitled, reclaims it in the same return.
In the UK construction sector a separate domestic reverse charge applies to most building and construction services supplied between VAT-registered businesses within the Construction Industry Scheme. Offrano's sales of enquiries to businesses also operate on a reverse charge basis; buyers should take advice on how it applies to them.