Reverse VAT means undoing the arithmetic
On this site, Reverse VAT describes extracting the net value from a VAT-inclusive price. For example, £120 including 20% becomes £100 net and £20 tax. It is a calculator operation and does not change who must account for VAT.
Reverse charge is a tax treatment
A reverse charge can require the customer to account for VAT instead of the supplier charging it in the ordinary way. Domestic construction reverse charge rules depend on conditions including the nature of the supply and the parties. A normal price calculator cannot determine whether those conditions apply.
Review the transaction before calculating
Check the contract, the actual services, registration information and relevant customer status. Save the evidence supporting the treatment. Do not use Remove VAT as a shortcut for converting an ordinary invoice into a reverse-charge invoice.
Use the right next step
If you simply need the net price from a normal VAT-inclusive receipt, use Reverse VAT. If a supplier mentions reverse charge, check the appropriate HMRC guidance and your accounting software workflow. Overseas and domestic reverse-charge cases need their own analysis.
Keep learning
FAQs
What is the VAT reverse charge?
The reverse charge shifts responsibility for accounting for VAT from the supplier to the customer. Instead of the supplier charging VAT, the customer records both the output VAT and (if entitled) the input VAT on their own return — so no VAT changes hands on the invoice.
What is the domestic reverse charge for construction?
Since 1 March 2021, most B2B construction services within the scope of the Construction Industry Scheme (CIS) are invoiced under the domestic reverse charge: the subcontractor does not charge VAT, and the contractor accounts for it. It does not apply to end users or intermediary suppliers connected with end users.
How does a reverse charge invoice look?
The invoice shows the net amount and states that the reverse charge applies — typically worded 'Reverse charge: the customer is to account for VAT' — and must not show VAT as a separate amount to pay. It still shows your VAT number and all other normal invoice details.
How is the reverse charge different from a normal VAT calculation?
With normal VAT, the customer pays VAT on top to the supplier, who pays it to HMRC. With the reverse charge, the net price is the full amount payable, and the customer self-accounts: the same VAT figure appears as output VAT and input VAT on the customer's return, usually netting to nil.
Does the reverse charge apply to services from overseas?
Yes, for most B2B services bought from abroad, the UK customer applies the reverse charge: the place of supply is treated as the UK, and the customer accounts for the VAT. This stops foreign suppliers needing to register for UK VAT on those services.
Official sources
Sources checked: 2026-09-26. Check the official guidance for later changes.
Educational information and estimates. These tools do not submit VAT returns or determine the treatment of a specific transaction.