A VAT reverse charge invoice shows the VAT rate and amount the customer must account for, but does not add that VAT to the cash the supplier collects. The invoice must make the reverse-charge treatment clear.
This 2026 example is for UK building and construction services. Check HMRC’s conditions before using it.
This is general information, not tax advice. The VAT domestic reverse charge does not apply to every construction supply or customer.
VAT reverse charge invoice example
A subcontractor supplies £3,000 of labour and £1,200 of materials. The entire £4,200 supply is standard rated and the domestic reverse charge applies.
| Description | Net amount | VAT rate | VAT accounted for by customer |
|---|---|---|---|
| Labour: partition framing and first fix | £3,000 | 20% | £600 |
| Materials: timber, board and fixings | £1,200 | 20% | £240 |
| Taxable total | £4,200 | £840 | |
| VAT charged to customer | £0 | ||
| Amount due before CIS | £4,200 |
Add a clear indication such as Reverse charge: customer to account for VAT to HMRC. The invoice should also show the VAT rate or amount required under HMRC’s rules.
Copyable reverse charge layout
Supplier: [Legal name, address and VAT number]
Customer: [Legal name, address and VAT number]
Invoice number: [Unique number]
Invoice date: [Date in 2026]
Tax point: [Date]
Site and PO: [References]
| Supply | Net | VAT rate | Reverse-charge VAT |
|---|---|---|---|
| [Covered construction service] | £[ ] | [20%/5%] | £[ ] |
| Total | £[ ] | £[ ] |
VAT due from supplier: £0
Cash amount due: £[net total]
Wording: Reverse charge: customer to account for VAT to HMRC
When the construction reverse charge applies
HMRC’s 2026 guidance says the domestic reverse charge applies only when the relevant conditions are met. In practical terms, check:
- the supply is a standard- or reduced-rate construction service within the rules
- the payment falls within the Construction Industry Scheme reporting scope
- both supplier and customer are UK VAT registered
- the customer is making an onward supply of construction services
- the customer is not an end user or intermediary supplier for that supply
Do not decide from the trade alone. The same roofer may use normal VAT for a homeowner, normal VAT for an end-user business and reverse-charge VAT for a main contractor.
Normal VAT versus reverse charge
| Treatment | Supplier adds VAT to amount due? | Who accounts for VAT? |
|---|---|---|
| Normal VAT | Yes | Supplier |
| Domestic reverse charge | No | Customer |
| Outside scope or exempt | Follow the relevant rules | Depends on treatment |
Under normal VAT, the £4,200 example becomes £5,040 due, including £840 VAT. Under the reverse charge, £4,200 is due and the customer accounts for £840 through its VAT return.
End users
An end user receives the construction service for itself rather than making an onward supply of construction services. Normal VAT usually applies where the customer has notified the supplier that it is an end user.
Keep the customer’s written notification with the job record. Do not use reverse-charge wording merely because both businesses work in construction.
Mixed supplies
A single contract can contain labour, materials and several activities. HMRC has rules for mixed supplies and connected services.
Do not split lines artificially to move part of one supply outside the reverse charge. Confirm the treatment of the contract as a whole where services are closely connected.
CIS and reverse-charge VAT together
CIS and VAT are separate calculations. CIS normally excludes VAT and qualifying materials from the deduction base. Reverse-charge VAT is calculated on the taxable supply.
Using the £4,200 example with a 20% CIS deduction on £3,000 labour:
| Calculation | Amount |
|---|---|
| Taxable supply | £4,200 |
| Reverse-charge VAT for customer to account for | £840 |
| VAT added to supplier’s cash due | £0 |
| CIS deduction: 20% of £3,000 labour | -£600 |
| Cash amount due to subcontractor | £3,600 |
The percentages happen to be 20% in this example, but the bases are different. The CIS invoice template shows the gross, deduction and net layout.
Reduced-rate work
If a covered construction service is reduced rated, use the correct reduced rate in the reverse-charge calculation. Do not default every reverse-charge invoice to 20%.
The invoice still shows the applicable rate and the VAT the customer accounts for. Check the underlying VAT liability before applying the reverse charge.
Credit notes and corrections
A reverse-charge credit note should clearly identify the original invoice and reverse the relevant net amount and VAT information. Do not edit the issued invoice silently.
Where the customer has already accounted for the VAT, both parties need records that point to the same correction period and document.
What Sendinvo does
On a CIS invoice, Sendinvo lets you add the reverse charge, choose the VAT rate and show the VAT the contractor accounts for. The VAT is not added to the amount due.
Sendinvo does not determine whether the reverse charge applies. Use HMRC’s domestic reverse charge guidance and the customer’s status before choosing the setting.
The construction invoice template covers the surrounding job, valuation and payment fields.
Final reverse charge check for 2026
- Is the service within the construction reverse-charge rules?
- Are both parties VAT registered?
- Is the customer making an onward construction supply?
- Has the customer given end-user notification?
- Is the VAT rate correct?
- Does the invoice show the rate or amount?
- Is the required reverse-charge indication clear?
- Is reverse-charge VAT excluded from the cash due?
- Is any CIS deduction calculated separately?
- Are the VAT numbers, tax point, site and PO present?
Start a free Sendinvo account to create a sterling CIS invoice and show the reverse-charge VAT without adding it to what the contractor pays.