Domestic Reverse Charge for Building and Construction Services
The Domestic Reverse Charge (DRC) is being introduced from 1 March 2021. The new reverse charge is the latest version to combat missing trader or carousel fraud that first appeared in relation to precious metals, computer chips and mobile phones. Due to both the Covid pandemic and preparations relating to Brexit, the introduction has been delayed twice. The DRC will affect businesses that:
- Buy or sell services that are ‘specified services’ that are reported within the Construction Industry Scheme (CIS)
- The supplier and the recipient are both registered for VAT in the UK
- The supply is standard rated or reduced rated.
- The supply is not to the end user or an intermediary
Supplies of zero rated construction services are not included within DRC. For example, construction services on a new build house will be invoiced as normal under the current regulations.