Frequently Asked Questions

The VAT Domestic Reverse Charge (DRC) is a mechanism designed to combat VAT fraud in the construction industry. Under the DRC, the customer receiving the service is responsible for accounting for VAT to HMRC rather than the supplier. This means that the supplier doesn't charge VAT on their invoice, and the customer accounts for the VAT through their VAT return.

The DRC applies to specified services reported under the Construction Industry Scheme (CIS) and applies throughout the supply chain up to the point where the customer is the end user or is not CIS registered.

You should use the DRC for your invoices when all of the following conditions are met:

• The supply is within the scope of CIS
• Both the supplier and customer are VAT-registered
• The service is not supplied to an end user or intermediary supplier
• The supply is standard or reduced-rated for VAT

Register for an account to use our DRC Checker tool that can help you quickly determine if the reverse charge applies to your specific situation.

The 2025 DRC regulations that came into effect on March 1, 2025, include several key changes:

• Expanded scope to include certain previously excluded construction services
• New rules for handling mixed supplies (where some elements fall under DRC and others don't)
• Clearer definitions and guidance on what constitutes an "end user" or "intermediary supplier"
• Updated requirements for invoice information and record-keeping

For detailed information on how these changes may affect your business, register for an account to access our detailed guidance and personalized advice.

IR35 (also known as off-payroll working rules) is tax legislation designed to identify contractors who work through their personal service companies (PSCs) but who should be treated as employees for tax purposes. It affects construction contractors who provide services through their own limited companies.

If you're found to be inside IR35, you'll need to pay income tax and National Insurance contributions as if you were an employee. This typically results in a higher tax burden than if you were genuinely self-employed.

For construction contractors, being caught by IR35 can significantly impact your take-home pay and may affect how you structure your business arrangements with clients.

Determining your IR35 status involves considering several key factors:

• Control: How much control does the client have over how you complete the work?
• Substitution: Can you send someone else to do the work in your place?
• Mutuality of Obligation: Is the client obligated to provide ongoing work, and are you obligated to accept it?
• Financial Risk: Do you take on financial risk like other businesses?
• Equipment: Do you provide your own equipment?
• Part and Parcel: Are you integrated into the client's organization?

Register for an account to use our IR35 Assessment Tool that can help you assess your status based on these factors.

DRC Assist provides several tools to help you maintain compliance with construction tax regulations:

• DRC Checker: Determines whether the reverse charge applies to your specific situation
• Invoice Generator: Creates compliant invoices with all required DRC information
• IR35 Assessment: Helps determine your IR35 status
• Document Analysis: Analyzes contracts and documents for compliance risks
• Tax Assistant: AI-powered help with construction tax questions

These tools are designed to simplify compliance and reduce the risk of errors that could lead to penalties. Register now to get started.

DRC Assist offers a standard subscription at £100 per month, which includes:

• Unlimited use of all compliance tools
• Document analysis with AI technology
• Unlimited invoice generation
• Access to premium templates and resources
• Tax Assistant powered by advanced AI

All new users can try DRC Assist with a 14-day free trial. Register today to start your trial.