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Readers’ forum: Reverse charge dilemma

21 September 2021
Issue: 4809 / Categories: Forum & Feedback
Dealing with reverse charge on subcontractor invoice.

I act for a building company that is working as the main contractor in converting an office block into apartments.

My client is using a lot of subcontractors to help with the project and the supplies by the subcontractors are subject to the new reverse charge legislation that took effect on 1 March 2021.

One of the subcontractors is showing the reverse charge as due at 20% VAT on their sales invoices rather than the 5% rate that applies to residential conversions.

The subcontractor is refusing to correct the invoices because they say it is not relevant to their own VAT returns. So for example if an invoice is for £10 000 (no VAT) they have stated on the sales invoice that my client must do a reverse charge entry for £2 000.

My initial instruction to my client was that he...

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