Construction VAT & Domestic Reverse Charge Calculator
Calculate VAT treatment under the Construction Services Domestic Reverse Charge (DRC) — VAT return boxes, invoice wording, and cash-flow impact for 2024/25.
Construction VAT / DRC Calculator
CIS Domestic Reverse Charge — invoice breakdown, VAT return boxes and cash-flow impact
Your role
Invoice details
DRC applies if: both parties VAT-registered, within CIS, customer is not an end user
Enter if you want to show the labour / materials split on the invoice
DRC planning tips
- Verify your customer's VAT number before applying DRC — use the HMRC online VAT checker (check.vat.number). If the customer is not VAT-registered, standard VAT applies.
- Invoice wording is mandatory:State clearly “Reverse Charge Supply — Customer to account to HMRC for the VAT of £X” on every DRC invoice. Omitting this can lead to HMRC penalties.
- DRC applies to the whole supply — both labour and materials are covered if they form part of a single construction service under CIS. You cannot split an invoice to avoid DRC on materials.
- Genuine mistakes: HMRC has confirmed a light-touch approach for genuine errors in the first period. If unsure, applying standard VAT is safer — but document why you believed DRC did not apply.
- Flat Rate Scheme: FRS users whose turnover is mainly DRC supplies must leave the scheme. Contact HMRC to exit before making DRC supplies — you cannot receive the FRS percentage on supplies where you collect no VAT.
DRC — who does what on the VAT return
| Party | Box 1 (Output tax) | Box 4 (Input tax) | Box 6 (Net sales) | Box 7 (Net purchases) |
|---|---|---|---|---|
| Subcontractor (DRC supply) | £0 (no VAT charged) | Normal input VAT | Net invoice value | Normal purchases |
| Contractor (receiving DRC invoice) | VAT on DRC invoice | Same VAT reclaimed | Normal sales | Net DRC invoice value |