VATREVCON33600 - How the construction reverse charge works: End users and intermediary suppliers: Utility companies as end users

Construction services received by utility companies (suppliers of gas, electricity, water, telephone or internet services to homes and businesses) will be eligible for exclusion from the reverse charge under the end user exclusion, if:

  • the utility company confirms to the supplier in writing that it is an end user
  • the work is being carried out during construction, repair or alteration of the utility company's own assets — for example part of their own infrastructure for delivering power, water or whatever utilities they are responsible for.

If a utility company charges for work to connect, disconnect, reconnect, divert, ‘make safe’ or ‘cap off’ parts of its own utility network, this work is generally not within the scope of ‘construction services’ for the purposes of the reverse charge. This is because they are not making onward supplies of construction services. Normal VAT rules will apply to any such charges.

Services provided by utility businesses which also do not fall within the construction reverse charge include:

  • provision of a connection to a utility network, or diversionary works to allow the relocation of the network
  • development and construction of a private network to be owned by the utility and leased or sold to the client
  • work that is not within the scope of the Construction Industry Scheme, such as the installation of a boiler (and ancillary supplies).

Exceptions to this will be when a utility company takes on the role of contractor for particular projects such as:

  • constructing, repairing or maintaining a private power or gas network for a client
  • installing full heating systems.