VAT Reverse Charge for Building and Construction Services Manual

VATREVCON35100 - How the construction reverse charge works: Schemes: Flat Rate Scheme

Supplies that the reverse charge applies to are excluded from the Flat Rate Scheme (FRS) and must be accounted for under the reverse charge provisions. Businesses who make supplies that are subject to the construction reverse charge may remain on the Flat Rate Scheme but may wish to consider whether it remains in their interests to do so (given that under the scheme they cannot recover VAT incurred on purchases of materials and overheads). If a business does choose to remain on the Flat Rate Scheme then they must carry out the reverse charge VAT liability calculations separately from their Flat Rate Scheme calculation, and then combine the figures when completing their VAT return.