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).

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

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

A compliant DRC invoice must include:

• All information required on a normal VAT invoice
• Clear indication that the reverse charge applies
• Statement that the customer must account for VAT
• The VAT amount or rate (but not included in the charge to customer)

IR35 (also known as off-payroll working rules) is tax legislation designed to identify contractors who work through personal service companies but should be treated as employees for tax purposes.

For construction contractors, IR35 status is crucial because it determines:

IR35 status is determined by examining the working relationship between you and your client, focusing on three key areas:

DRC Assist provides a comprehensive suite of construction tax compliance tools:

Your subscription includes:

• Unlimited DRC checks and invoice generation
• Comprehensive IR35 assessments
• Document analysis and compliance checking
• Expert support and guidance
• Regular updates and new features