Reverse Charge VAT

Definition of the VAT reverse charge

The reverse charge is how you must account for VAT on services that you buy from businesses that are based outside the UK.

If you are not registered for VAT, the reverse charge will not apply to you.

The reverse charge is the amount of VAT you would have paid on that service if you had bought it in the UK. You have to add that amount to the total of VAT you are going to pay to HMRC that quarter, but also to the amount of VAT you are going to reclaim in that quarter. That means you don't pay anything extra to HMRC or reclaim anything extra from them.

Example:

For example, you may have hired a translator in France to translate a webpage for you. If you'd hired someone in the UK to do this work, the cost would have been standard-rated for VAT at 20%. If this service was worth £100, the amount of the reverse charge would be £20, or £100 x 20%.

The VAT domestic reverse charge procedure is an anti-fraud measure designed to counter criminal attacks on the UK VAT system by means of sophisticated fraud.

This notice explains the VAT reverse charge procedure, which applies to the supply and purchase of specified goods and services. It is not to be confused with the reverse charge for cross-border services, details of which are found in the Place of supply of services (VAT Notice 741A).

For clarity, we have inserted ‘domestic’ into the title of this notice as it’s often referred to as such and you should assume any other references to reverse charge in this notice are for the domestic one unless specifically indicated otherwise.

This notice also explains when the receipt of specified goods and services by a non-VAT-registered business makes it liable to be registered for VAT.