Domestic reverse charge invoice UK: CIS wording, worked example, and when you must not charge VAT

If you are VAT-registered and you invoice a VAT-registered contractor under CIS, adding 20% VAT to the total is often the wrong invoice. The domestic reverse charge for building and construction services moves the VAT onto the customer's return. You still show the VAT that would have applied. You do not add it to what they pay you. Get that backwards and the contractor cannot process the bill, or HMRC expects VAT you never collected.

This is the invoice page: what has to be on the PDF, a full labour-plus-materials example with CIS at 20% and at 30%, and when you should still charge VAT as normal. It is written for subcontractors (electricians, plumbers, plasterers, brickies, roofers, joiners) billing contractors, not for homeowners.

InvoiceAdept is invoicing software from Tech Me Today Ltd (Companies House 15917255, ICO ZB944663). We can mark a VAT invoice as reverse charge. CIS deductions sit on Pro+ at £12.99 a month. We do not file your VAT return, we do not file CIS300, and we do not send Making Tax Digital updates to HMRC. The rules below are HMRC's, not ours.

A shorter tax explainer already sits at domestic reverse charge VAT for construction. Use that for the overview. Use this page when you are actually raising the invoice.

What the reverse charge actually changes on the invoice

Normally you charge VAT, the customer pays it, and you hand it to HMRC on your VAT return. Under the construction reverse charge that payment never happens. HMRC's technical guide is blunt: you show every field a VAT invoice needs, you make it obvious that the reverse charge applies and that the customer accounts for the VAT, and you state how much VAT is due under the reverse charge — but you do not include that VAT in the amount charged.

The customer (the contractor) puts that VAT on their own return as output tax, and usually reclaims it as input tax on the same return if they are fully taxable. You put the net value of the sale on your return. You do not put output tax on that sale.

CIS is a separate scheme. Reverse charge is VAT. CIS is a deduction from labour, paid to HMRC as an advance on the subcontractor's tax. Both can sit on the same invoice. Mixing them up is how people deduct 20% off VAT, or add VAT to a reverse-charge total.

The reverse charge has been in force for construction services since 1 March 2021. It was brought in to cut missing-trader VAT fraud in the labour chain. It is not optional once the conditions are met.

When you must use it (all of these, not some)

HMRC's supplier page lists the test. You must use the reverse charge if you are VAT-registered in the UK, you supply building and construction industry services, and all of the following are true:

1. Your customer is registered for VAT in the UK.

2. Payment for the supply is reported within the Construction Industry Scheme.

3. The services are standard-rated or reduced-rated (see VAT Notice 708 on buildings and construction for the rate, not for a guess).

4. You are not an employment business supplying staff or workers.

5. Your customer has not given written confirmation that they are an end user or intermediary supplier.

If any one of those fails, you do not reverse-charge that invoice. The common miss is number 5. Believing the customer is an end user is not enough. HMRC says that if they have not notified you in writing, and the other conditions are met, you still apply the reverse charge.

Check the customer's VAT number. Check whether they are reporting the payment under CIS. HMRC says customers who are contractors for CIS purposes may not show up on a CIS registration check; if so, ask them to confirm they are reporting under CIS before you apply the reverse charge.

When you must still charge VAT as normal

A main contractor working for a householder is not automatically an end user for the subbies underneath. HMRC's example: there is no reverse charge on the supply to the private customer, because that customer is not VAT-registered. That does not turn the main contractor into an end user. Supplies made to that contractor by subcontractors can still be reverse charge if the other conditions are met. If a blog — including an older one of ours — told you "contractor on a house is always an end user", ignore it and read the technical guide.

What has to be on a reverse charge invoice

Start with a proper UK VAT invoice. HMRC's baseline is invoicing and taking payment from customers. Then add the reverse-charge lines. If CIS also applies, add the CIS lines. Do not delete one set to make room for the other.

HMRC's invoices section gives wording that meets the legal requirement. Use one of these, in those words:

• VAT Act 1994 Section 55A applies

• S55A VATA 94 applies

• Customer to pay the VAT to HMRC

The regulations require the reference "reverse charge". "Customer to account for VAT" without those two words is sloppy. InvoiceFree's template uses "Reverse charge: Customer to account for VAT to HMRC", which covers the requirement. Either that or HMRC's "Customer to pay the VAT to HMRC" is fine. Pick one, print it on every reverse-charge invoice, and stop rewriting it in WhatsApp English.

If your software cannot print the reverse-charge VAT amount, HMRC says you must still say the customer accounts to HMRC for the reverse charge, and the customer must be able to see which lines it applies to. Do not use that fallback if the software can show the pounds.

Worked example: the same job, three invoices

A VAT-registered electrician, CIS-registered and verified at 20%, completes a first-fix on a new commercial site.

• Labour: £2,000

• Materials bought for this job: £500

• VAT at 20% would be £500 on the £2,500 construction supply

• CIS at 20% applies to labour only: £400

• CIS at 30% (unregistered / unverified) would be £600

HMRC's CIS rules: the deduction is on the labour, not on materials, and not on VAT. See what you must do as a CIS subcontractor.

A — Homeowner, you are VAT-registered (no CIS, no reverse charge)

This is the invoice most people still have in their head.

You account for £500 output tax. There is no CIS because this is not a contractor payment under the scheme.

B — VAT-registered contractor, reverse charge applies, you are verified at 20%

This is the invoice that actually goes to a main contractor on CIS.

Wording on the invoice: Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC.

What happens to the money:

• Contractor pays you £2,100.

• Contractor remits £400 CIS to HMRC against your UTR.

• Contractor accounts for £500 reverse-charge VAT on their VAT return (and usually reclaims it there).

• You do not receive, and do not pay over, that £500.

• You reclaim the £400 CIS through Self Assessment, in the normal way. It is not an extra tax. It is tax already paid.

The VAT figure is printed so the contractor knows what to put on their return. It is not a request for £500.

C — Same contractor, you are not CIS-registered (30%)

Same labour and materials. Reverse charge still applies. The only change is the CIS rate.

That extra £200 stays out of your account until Self Assessment. Registering for CIS is free. Doing the job unverified is how you lend HMRC 10% of your labour for a year. The reverse charge does not fix that.

D — Written end-user notice, CIS still applies, charge VAT as normal

The customer is VAT-registered and CIS-registered, but they have sent the written end-user wording HMRC publishes. Reverse charge is off. CIS is still on, because they are still a contractor paying you for construction operations.

You now have £500 of VAT in, which you will pay to HMRC on the return. Cash-flow is different from invoice B even though the job is identical. That is the point of the notice. Do not "helpfully" reverse-charge an end user who has told you in writing to issue a normal VAT invoice.

The end-user notice, copied from GOV.UK

HMRC's suggested wording, from the technical guide:

> We are an end user for the purposes of section 55A VAT Act 1994 reverse charge for building and construction services. Issue us with a normal VAT invoice, with VAT charged at the appropriate rate. We will not account for the reverse charge.

It can go in a letter, an email, or a contract. Keep it. HMRC says once it is made, you do not need to re-check VAT and CIS status for that purpose.

Who can send it: a VAT and CIS-registered business that does not make onward supplies of the building and construction services they receive. Landlords having their own building worked on, a developer keeping the asset, a business having its own premises fitted — often end users, if they notify you. A contractor who is selling the work on is usually not.

Intermediary suppliers (VAT and CIS-registered, connected or linked to an end user, re-supplying without material change) can use the same treatment if they notify you in writing. They may even call themselves end users on the notice. That is HMRC's wording, not a loophole you invent on a site WhatsApp group.

If you think they are an end user and they will not put it in writing, apply the reverse charge. HMRC puts that onus on you.

CIS and reverse charge on the same PDF

The order of operations people get wrong:

1. Split labour and materials. Always. CIS needs it. Reverse charge for a single construction supply usually applies to the full value of that supply, labour and materials together — HMRC is explicit that goods supplied with construction services are one supply, and the reverse charge applies to the invoice total, not only the labour line. That is the opposite of CIS. CIS ignores materials. Reverse charge, on a supply-and-fix, usually does not.

2. Work out the VAT that would apply to that construction supply. Show it. Do not add it to the payable total if reverse charge applies.

3. Work out CIS on labour only, VAT-exclusive. Show the rate, the pounds, the net after CIS.

4. Payable = labour + materials − CIS. Not labour + materials + VAT − CIS. Not labour + materials − CIS − VAT.

A 5% disregard exists in HMRC's guide for mixed supplies where the reverse-charge element is trivial. Do not use it because a forum said so. Read the guide, or ask the person who files your VAT return. Invoice software should not silently apply a 5% fudge.

Labour-only subcontractors are in. Employment businesses supplying workers on a timesheet, with the customer responsible for the work and for defects, are out. If you price a measured job and you are responsible for the work, you are the labour-only subcontractor, not an agency. HMRC draws that line in the same technical guide.

Cash flow, the flat-rate scheme, and cash accounting

Reverse charge removes the old habit of holding the customer's VAT until the next return. You never receive it. If you used that float to buy fittings, that float is gone. HMRC says you can apply to move to monthly VAT returns through your online VAT account if repayment timing matters.

You cannot use the VAT Cash Accounting Scheme for supplies you buy or sell that are subject to the reverse charge. You can keep cash accounting for everything else.

Flat Rate Scheme: reverse-charge supplies are not accounted for under the scheme. If you make reverse-charge supplies, exclude that value from the flat-rate calculation. If you receive reverse-charge supplies, you still have to account for that VAT on the return and recover it there. HMRC also notes that flat-rate users who make reverse-charge supplies should look again at whether the scheme is still useful, because you cannot recover VAT on materials and overheads under flat rate. That is a VAT-return decision, not an invoice-app decision.

InvoiceAdept does not submit the VAT return. Digital invoice records are the bit we do. Filing is FreeAgent, QuickBooks, your accountant, or other software on HMRC's list.

What happens if you get the invoice wrong

Three mistakes show up constantly:

You charge VAT when reverse charge applies. The contractor should not pay it. If they do, you are holding VAT that belongs in their reverse-charge boxes, not yours. Credit note the invoice, reissue it correctly, do not "net it off next month" in a text.

You reverse-charge when you should have charged VAT. You have undercharged. HMRC can still expect the output tax from you. The customer has not accounted for reverse-charge VAT they were never told about. This is the expensive one. It happens when you assume a landlord, a school, or a facilities company is "in the chain" without checking VAT, CIS, and the written notice.

You omit the reverse-charge wording, or you apply CIS to materials. The first makes the invoice non-compliant as a reverse-charge VAT invoice. The second is a CIS error that shrinks what you get paid. Both get the bill queried. Queried bills sit in accounts payable until someone is in a good mood.

HMRC applied a light-touch period when the rules started in 2021. That period is over. Correct errors as soon as you spot them.

How the apps actually handle this

Checked 28 August 2026. None of these file your VAT return unless they separately say they are HMRC-recognised for that job.

InvoiceFree wins on price if you only need the correct CIS + reverse-charge PDF at £0. That is a real offer. The catch is the 1% if the contractor pays the Stripe link, and there is no in-app WhatsApp send.

InvoiceAdept wins if you already want Pro for WhatsApp and card collection without a second percentage, and you will pay Pro+ for CIS. It loses if your only requirement is unlimited free CIS invoices. We should not pretend otherwise. There is a full comparison in InvoiceAdept vs InvoiceFree.

Tradify at £34 a user is the wrong tool for this invoice. Native reverse charge is not why people buy it. Yoley is the wrong tool if you are not on iPhone. FreeAgent and QuickBooks are the right tools for the VAT return, not for typing the invoice in a van.

A copy-paste skeleton

Use this as the shape. Do not delete the reverse-charge block when the VAT amount is "only for their records". Do not delete the CIS block when materials are £0 — show materials at £0 so the split is obvious.

INVOICE (domestic reverse charge)

From
[Trading name]
[Address]
VAT number: [GB…]
UTR: [10 digits]

To
[Contractor name]
[Address]
VAT number: [GB…]

Invoice number:
Invoice date:
Due date:
Site / job ref:

Description of work:
[What, where, which dates]

Labour                              £
Materials (this job only)           £
Subtotal (VAT-exclusive)            £

VAT at 20% under reverse charge     £   (customer accounts — not payable to us)
CIS deduction ([20/30/0]% on labour)   −£
Amount payable                      £

Reverse charge: VAT Act 1994 Section 55A applies.
Customer to pay the VAT to HMRC.

CIS deducted by the contractor is paid to HMRC against this UTR.
Payment: [sort code / account] or pay link
Terms: [e.g. 14 days]

If they have given an end-user notice, throw this skeleton away and issue a normal VAT invoice, with CIS if CIS applies.

What InvoiceAdept will and will not do

On the pricing page (28 August 2026):

• Free — £0, 5 invoices a month. Enough to see the template. Not a free-forever CIS factory.

• Pro — £7.99 a month excl. VAT. Unlimited invoices, Stripe with no extra InvoiceAdept platform fee, WhatsApp send, reminders, quotes, expenses.

• Pro+ — £12.99 a month excl. VAT. CIS on the invoice, plus bank rec and the rest of that plan.

The VAT invoices feature is where reverse-charge marking lives: you mark the invoice, the wording goes on, the net is shown without VAT. CIS invoices are the labour/materials split and the 0/20/30% deduction. Use both on the same document when both apply.

We do not:

• file the VAT return

• file the contractor's CIS300

• send MTD for Income Tax quarterly updates

• decide whether your customer is an end user

• apply the 5% disregard for you as a hidden setting you cannot see

If you need filing, that is a different product. The honest version is in MTD invoicing software for UK trades: records vs filing.

If five reverse-charge invoices a month is your actual volume and you do not want to pay, InvoiceFree will generate the document at £0. If you want the same numbers sent in WhatsApp with a pay link and no 1% on top of Stripe, that is Pro / Pro+.

Frequently asked questions

Do I charge VAT on a reverse charge invoice?

No. You show the VAT the customer must account for. You do not add it to the total they pay. HMRC's invoice rules are in the VAT reverse charge technical guide.

What exact words do I put on the invoice?

Include the reference "reverse charge". HMRC examples that meet the legal requirement: "VAT Act 1994 Section 55A applies", "S55A VATA 94 applies", or "Customer to pay the VAT to HMRC".

Does reverse charge apply to materials?

On a supply-and-fix construction service, HMRC treats goods supplied with the services as one supply. The reverse charge usually applies to the full invoice value, not only labour. CIS is the opposite: CIS is labour only. Keep the lines split so both calculations are visible.

Does it apply when I invoice a homeowner?

No. Private domestic customers are not VAT-registered. Charge VAT as normal if you are registered. CIS does not apply to ordinary householders having their own home done.

The contractor is working for a homeowner. Am I reverse-charging the contractor?

Often yes, if you, the contractor, VAT and CIS conditions are met and they have not given an end-user notice. The householder job does not turn the contractor into an end user. Read HMRC's end-user example before you take a site manager's word for it.

Do I need a written end-user notice?

If they want you to charge VAT as normal, yes. HMRC's notice wording is published. If they will not send it, and the other tests are met, apply the reverse charge.

Can InvoiceAdept file this on my VAT return?

No. We store the invoice as a digital record and we can export. We do not submit VAT returns or CIS300. Use HMRC-recognised software or an accountant for filing.

Is reverse charge on InvoiceAdept's free plan?

Free is 5 invoices a month and is not the CIS plan. CIS deductions are Pro+ at £12.99. Reverse-charge marking is documented on the VAT invoices feature. InvoiceFree puts CIS and reverse charge on its free plan. Pick on that difference, not on a slogan.

Does Yoley do reverse charge?

CIS is on Yoley's free iPhone plan. Reverse-charge invoicing was not confirmed on the public pages checked on 28 August 2026. Do not assume an iPhone CIS app is printing Section 55A wording until you have seen a sample PDF.

What if I am on the Flat Rate Scheme?

Exclude reverse-charge sales from the flat-rate calculation. Think hard about whether the scheme still pays, because you cannot recover VAT on purchases under it. That is VAT advice you should confirm with whoever files the return.

If you want to raise the next invoice in InvoiceAdept, start on the free plan — five invoices, no card required. If this month's contractor work needs CIS on the PDF, that is Pro+. If the contractor will pay from a chat thread, that is Pro, with Stripe's fee and no extra cut from us.