VATREVCON24000 | Scope of the construction reverse charge: Linked contracts with different reverse charge treatments

If two parties have already had a reverse charge service between them on a construction site, for convenience they can both agree that any more construction supplies on that site can be treated as reverse charge services, even if they would not otherwise be reverse charged. However, as long as these contracts are not linked, reverse charging those that would not otherwise be reverse charged is optional. (SI 2019/892 art. 8(2)).

If a business enters into two separate contracts with the same supplier, where one of the contracts is within the scope of the CIS, and the contracts form a single supply of services, the reverse charge will apply to both contracts, as they comprise a single supply for VAT purposes. For example, supply of plant only is not within the scope of the CIS, but if a business enters into a contract for the supply of plant, and another contract for the supply of an operator to operate that plant (with the same supplier), the reverse charge will apply to both.