VATREVCON32200 | How the construction reverse charge works: Who needs to apply the construction reverse charge: Gross Payment subcontractors

Under the CIS, deductions may be made at one of two prescribed rates from payments made to subcontractors engaged in construction operations. However, under the provisions of Finance Act 2004 s.63, subcontractors who satisfy certain conditions and whom HMRC has good reason to believe will pay tax on their profits through the normal processes are able to receive payments due to them in full. Such subcontractors are referred to as ‘Gross Payment subcontractors’. (see CISR11020)

Where the supplier has Gross Payment Status, the construction reverse charge still applies to specified services.