VATREVCON22000 | Scope of the construction reverse charge: Services covered and not covered by the construction reverse charge

The reverse charge must be used (subject to end user or intermediary status – see VATREVCON33000) for supplies of standard and reduced rate VAT services:

• between two businesses who are both registered (or required to be registered) for VAT in the UK, and

• reported within the Construction Industry Scheme (the scope of the CIS can be found at CISR14020).

Traders must use the reverse charge for the services listed below (subject to end user or intermediary status – see VATREVCON33000) when they are supplied from one VAT registered business (or business that is required to be VAT registered) to another, and when the customer is a contractor required to report payments through the CIS. The CIS payment status of the supplier is irrelevant. Supplies for which payment does not have to be reported under the CIS are not subject to the reverse charge. The list of services is the same as the list of ‘construction operations’ covered by the CIS (Finance Act 2004 s74), except for supplies of workers provided by employment businesses (see VATREVCON26000), which are not subject to the reverse charge. Supplies of any related materials are also subject to the reverse charge, except where the associated supply of labour is zero-rated.

The specified services are:

• construction, alteration, repair, extension, demolition or dismantling of buildings or structures (whether permanent or not), including offshore installations

• construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipe-lines, reservoirs, water-mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence

• installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection

• internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration

• painting or decorating the internal or external surfaces of any building or structure

• services which form an integral part of, or are preparatory to, or are for rendering complete, the services listed above, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.

These services are listed in SI 2019/892 art. 5.

For specific guidance on when traffic management services fall under the CIS and therefore the reverse charge, effective from March 2025, see CISR14305.

Traders must not use the VAT domestic reverse charge for the following services, when supplied on their own:

• drilling for, or extraction of, oil or natural gas

• extraction (whether by underground or surface working) of minerals and tunnelling or boring, or construction of underground works, for this purpose

• manufacture of building or engineering components or equipment, materials, plant or machinery, or delivery of any of these things to site

• manufacture of components for systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivery of any of these things to site

• the professional work of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape

• the making, installation and repair of artistic works, being sculptures, murals and other works which are wholly artistic in nature

• signwriting and erecting, installing and repairing signboards and advertisements

• the installation of seating, blinds and shutters

• the installation of security systems, including burglar alarms, closed circuit television and public address systems.

These services are listed in SI 2019/892 art. 6.

However, as per SI 2019/892 art. 7, if any of the services set out in art. 6 are supplied as part of a single supply with the services set out in art. 5, all will be subject to the reverse charge.