VATREVCON44000 - Compliance issues: How and who to assess
Where supplies are subject to the reverse charge, the supplier should refrain from charging VAT and make clear to their customer on their invoice that the reverse charge should be applied (see VATREVCON37100 for more information on invoicing). However, if the reverse charge has not been applied and instead VAT has been accounted for as normal (and there is no evidence that the customer was eligible to be treated as an end user and was treated as such by their supplier - see VATREVCON43000 for specific considerations around eligible end users), the customer (the buyer of the supplies) must be assessed for the output tax they should have accounted for under the reverse charge. They can only pursue recovery of any output VAT they wrongly paid to their supplier from the supplier directly, not from HMRC. The supplier would in turn be eligible to recover any overdeclared output tax by means of normal error correction procedures.
For supplies made within the first six months of the construction reverse charge, from March 2021, where the construction reverse charge was mistakenly not applied and the error was not deliberate, no penalties applied, although assessments for the tax due did still apply. This was called the 'light touch period'.