Reverse charge invoice wording, with a template

A reverse charge invoice must carry the words "reverse charge", show all the usual VAT invoice details, and state the VAT the customer must account for, or the rate, without adding it to the total. HMRC accepts wording such as "Reverse charge: VAT Act 1994 Section 55A applies" or "Reverse charge: Customer to pay the VAT to HMRC".

When must the invoice use the reverse charge?

When four things are true. You're VAT-registered in the UK, your customer is VAT-registered in the UK, the payment is reported through the Construction Industry Scheme, and the service is a standard-rated or reduced-rated building service. The rule has applied to invoices with a tax point on or after 1 March 2021.

Most building work counts: construction, repairs, extensions, demolition, installing heating, lighting, air conditioning, drainage, power and fire protection systems, painting and decorating, scaffolding and site clearance. Some services stay outside when supplied on their own, including architects' and surveyors' work, signwriting, installing burglar alarms and CCTV, and installing seating, blinds and shutters.

What exactly must the invoice say?

HMRC's technical guide sets three requirements. Show all the information a normal VAT invoice needs. Make clear that the domestic reverse charge applies, and the VAT regulations say the invoice must include the reference "reverse charge". State the VAT due under the reverse charge, or the rate if you can't show the amount, without adding it to what you charge.

HMRC gives these as acceptable wording:

• VAT Act 1994 Section 55A applies
• S55A VATA 94 applies
• Customer to pay the VAT to HMRC

If your accounting software can't show the reverse charge VAT, HMRC says to add wording such as "customer to account to HMRC" for the reverse charge.

Your business name
Your address
VAT registration number: your VAT number

INVOICE invoice number
Invoice date and tax point: date

To: customer business name
customer address
Customer VAT number: customer VAT number

Job: site address and short description

Labour: description                 £labour, net
Materials: description              £materials, net
Total (excluding VAT)                    £net total

VAT at 20%: £VAT amount
Reverse charge: Customer to pay the VAT to HMRC.
VAT Act 1994 Section 55A applies.

Amount due (before any CIS deduction): £net total
CIS: labour £labour, materials £materials

Payment terms: terms
Bank: account name, sort code, account number

How do the figures work on a real invoice?

Take an electrical subcontractor fitting out a café for a VAT-registered main contractor, under CIS, at 20%.

On a normal invoice the same job would have totalled £5,760 with VAT. Under the reverse charge the subbie never handles the £960, and that changes cash flow. If you used to keep VAT receipts in the bank until the quarter end, that cushion goes. HMRC's guidance for suppliers asks you to decide whether to move to monthly VAT returns, because you'll be reclaiming VAT on materials without collecting any on your sales.

What if your customer is an end user?

Charge VAT normally. An end user is a VAT- and CIS-registered business that doesn't sell the construction work on, such as a property company having its own offices refitted. An intermediary supplier is one connected to an end user, for example in the same corporate group. Either can tell you in writing, and then the reverse charge doesn't apply.

HMRC suggests wording for that notice. If you work for developers or landlords who use their own building, it's worth asking them to send it.

We are an end user for the purposes of section 55A VAT Act 1994 reverse charge for building and construction services.

Please issue us with a normal VAT invoice, with VAT charged at the appropriate rate.

We will not account for the reverse charge.

Customer business name
Signed, name and date

What about invoices with mixed work?

If any service on the invoice falls under the reverse charge, the whole invoice normally does, including goods supplied with the service. The exception is the 5% disregard: if the reverse charge part is 5% or less of the whole supply, you can ignore it. HMRC says to agree that with the customer at the start of the contract, based on overall contract values, not invoice by invoice.

Zero-rated work stays outside. Standard-rated items included in a zero-rated supply don't trigger the reverse charge, so a new-build housing contract or a heat pump install in a home goes out at 0% without it. See VAT on heat pumps, solar and EV chargers for when that changes on 1 April 2027.

How do you correct a mistake?

HMRC says errors should be corrected as soon as possible. Where you issue a credit note, include the reduction in value on the VAT return for the period the credit note is issued in, then reissue the invoice with the right treatment. A metal fabrication firm we spoke to asked whether its software applied the reverse charge automatically. Check this before you rely on it: set a reverse charge tax rate in your accounting software and test one invoice.

Common questions