How the VAT Reverse Charge operates in the building trade ?
STEPS IF YOU ARE A SUBBIE OR SOMEONE HIRING A HIRING A SUBBIE
1. The charge for services by the sub-contractor does not include VAT on the
services.
2. The VAT registered sub-contractor issues an invoice to the principal, which shows
all the same information that appears on a VAT invoice, except the VAT rate and
VAT amount. The invoice should include the VAT registration number of the subcontractor.
3. The invoice should also contain the statement ‘VAT on this supply to be
accounted for by the Principal Contractor’.
4. The sub-contractor puts zero in his VAT on sales for this sale (T1) and claims as normal any vat back on expenses etc in vat on purchases (T2) in his/her vat return.
5. The principal contractor pays the sub-contractor for the services. This payment
should not include VAT.
6. If RCT is to be deducted, it should be calculated on the VAT-exclusive amount.
7. The principal contractor should include the VAT on the services received from
the sub-contractor in his/her VAT return for the period in which the supply is
made as VAT on Sales (T1).
8. Where entitled to do so, the principal can claim a simultaneous input credit in
his/her VAT return for the period.
Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie