Short answer: the VAT domestic reverse charge applies only to construction services that must be reported within CIS, charged at the standard or reduced rate, to a customer registered for VAT and CIS that has not given you written end user or intermediary supplier notice. HMRC treats servicing, maintaining and repairing heating, water and drainage systems on their own as outside CIS, so routine maintenance is normally invoiced with VAT as usual.
The four tests
The reverse charge comes from section 55A of the VAT Act 1994 and an order made under it in 2019, in force since 1 March 2021. HMRC's guidance says it "must be used for most supplies of building and construction services". A supply only falls under it when all four tests below are met.
| Test | If the answer is no | Where it comes from |
|---|---|---|
| Is the payment one that must go on a CIS monthly return? | Normal VAT rules | The 2019 Order, article 8(1)(a) |
| Is the work standard or reduced rated (20% or 5%)? | Normal VAT rules (zero-rated work is outside) | GOV.UK reverse charge guidance |
| Is the customer registered for VAT in the UK and for CIS? | Normal VAT rules (a private householder, for example) | GOV.UK reverse charge guidance and technical guide |
| Has the customer not given you written notice that they are an end user or intermediary supplier? | Normal VAT rules once the notice is in writing | The 2019 Order, article 8(1)(b) and (1A); technical guide |
The list of services is the same as the list of "construction operations" in CIS, except for supplies of workers by employment businesses (GOV.UK). So for building services firms the first test does most of the work. Our guide to CIS for building services contractors covers the CIS side in full.
Is maintenance work inside CIS?
The CIS definition covers the "installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection" (Finance Act 2004, section 74(2)(c)). HMRC's CIS manual says this "only applies to installation of these systems, not their repair or maintenance. Neither does it apply to their alteration or extension(s)" (CISR14090).
| Work | Inside CIS? | So the reverse charge | HMRC source |
|---|---|---|---|
| Servicing or maintaining a heating, ventilation, air-conditioning, drainage, sanitation, water supply or fire protection system | No | Does not apply | CIS 340, Appendix C |
| Repairs to a system, such as soldering a leaking pipe, replacing a defective tap, fixing a leaking radiator or fitting thermostatic radiator valves | No | Does not apply | CISR14090 |
| Replacing a central heating boiler | No: HMRC says this is not "the installation of a system of heating" | Does not apply | CISR14090 |
| Extending a system, such as adding a radiator | No | Does not apply | CIS 340, A.16; CISR14090 |
| Replacing a whole system (HMRC's example is a complete electrical rewire) | Yes: this "amounts to installation" | Applies if the other tests are met | CISR14090 |
| Installing a complete system in a new build or a building being redeveloped | Yes | Applies if the other tests are met | CIS 340, A.16 |
| Making good the building after a system repair | Yes | Applies if the other tests are met | CIS 340, A.11 |
| Installing water meters, water softeners and other water treatment systems | Yes | Applies if the other tests are met | CISR14090 |
| Installation of and repair to kitchens and bathrooms | Yes (listed as included) | Applies if the other tests are met | CIS 340, Appendix C |
| Alteration or repair of works forming part of the land, such as sewers, water mains and water treatment plant | Yes | Applies if the other tests are met | CIS 340, A.15 |
| Installing fire alarms or security systems | No | Does not apply | CIS 340, Appendix C (fire alarms and security systems); the 2019 Order, article 6(i) (security systems) |
Two rows need care. Bathroom repairs are listed as inside CIS, while replacing a single tap on its own is outside. And plant inside a building is not part of the land (CIS 340, A.15), but an outdoor pumping station connected to a sewer may be. Where a job sits on the line, ask your accountant or HMRC before you invoice, and keep the answer.
Mixed contracts
One contract can pull maintenance into CIS. HMRC says that where a single contract mixes construction and non-construction work, "all payments due under the contract are within the scheme" (CIS 340, 2.21), even if shown on separate invoices (A.4). CISR14090 gives the building services case: if a contract to repair a system "includes any making good to the building or structure, then the Scheme will apply to any payment under that contract". CIS 340 (6.17) also notes that a managing agent's contract can be a mixed contract where it "includes elements of security, cleaning, minor repairs and maintenance".
VAT adds its own rule for a single supply. If goods are supplied with construction services, the reverse charge applies to the full value of the invoice. Where the reverse charge part is 5% or less of the whole, both sides can agree at the start of the contract to use normal VAT. The 5% is judged on contract values, not invoice by invoice (technical guide).
Who is your customer?
- A main contractor or FM company that sells the work on is not usually an end user. HMRC: "Building contractors are not usually end users because they make onward supplies of construction services."
- The building owner or occupier that uses the work itself can be an end user, but only once it tells you so in writing, by post, email or in a contract. Until then, if it is VAT and CIS registered and the work is inside CIS, apply the reverse charge.
- A landlord that recharges the work to its tenant, or a company in the same group as the end user, can give written notice as an intermediary supplier and get a normal VAT invoice, as long as it passes the work on without material alteration.
- Public bodies usually fall under the end user exclusion, according to the technical guide, but not when they act commercially and sell the work on.
- Private householders are outside the reverse charge because they are not VAT registered. Your own subcontractors on that job still use it if the other tests are met.
HMRC suggests this wording for an end user notice: "We are an end user for the purposes of section 55A VAT Act 1994 reverse charge for building and construction services. Issue us with a normal VAT invoice, with VAT charged at the appropriate rate. We will not account for the reverse charge."
Worked example: one subcontractor, three jobs
A heating and plumbing firm, registered for VAT and CIS, works for an FM company on an office block. The FM company is VAT and CIS registered and sells the work on to the building owner, so it has given no end user notice. The figures are examples.
| Job | Inside CIS? | Net | VAT on the invoice | The FM company pays |
|---|---|---|---|---|
| Quarterly PPM visit: boiler run checks, pumps, pressurisation unit | No: servicing only | £600.00 | £120.00 charged at 20% | £720.00 |
| Replacing one failed boiler in the plant room, with no building work in the order | No: replacing a boiler is not installing a system (CISR14090) | £9,800.00 | £1,960.00 charged at 20% | £11,760.00 |
| Repairing a burst pipe and making good the ceiling, under one order | Yes: making good brings the whole contract in | £1,450.00 | £290.00 shown, not charged (reverse charge) | £1,450.00, less any CIS deduction on labour |
On the third job the FM company accounts for the £290.00 on its own VAT Return and, under the normal rules, reclaims it on the same return. The heating firm enters only the net £1,450.00 as a sale and no output tax. The FM company also deducts CIS from the labour part of the payment; the CIS calculator works out the figure.
If the building owner had hired the firm directly and given written end user notice, the third invoice would carry £290.00 VAT in the normal way.
What the invoice must say
- Everything a normal VAT invoice must show.
- A note that the reverse charge applies and the customer must account for the VAT. The VAT Regulations 1995 require the reference "reverse charge". HMRC's examples: "VAT Act 1994 Section 55A applies", "S55A VATA 94 applies", "Customer to pay the VAT to HMRC".
- The amount of VAT due under the reverse charge, or the rate if you cannot show the amount, without adding it to the total.
- Credit notes on reverse charge invoices say that the reverse charge applies and show the reduction in the VAT the customer accounts for.
Effects on your VAT accounting
- Cash flow. A subcontractor stops receiving VAT on reverse charge sales and may become a repayment business. HMRC says you can ask to move to monthly returns in your online VAT account.
- Cash Accounting Scheme. It cannot be used for reverse charge supplies bought or sold. You can stay on it for your other supplies.
- Flat Rate Scheme. Reverse charge sales are left out of the flat rate calculation. Reverse charge purchases are accounted for and recovered on the same return.
Who does what
| Who | What they do |
|---|---|
| Supplier (your firm, when you invoice) | Decides whether the work is inside CIS, asks the customer for its VAT, CIS and end user status, and words the invoice correctly. |
| Customer (contractor or FM company) | Accounts for the VAT on its return, gives written end user or intermediary notice where it applies, and tells you if its status changes. |
| End user (owner or occupier) | Chooses whether to give written notice. HMRC: being an end user "is optional". |
| Your accountant | Settles borderline work, such as mixed contracts and pumping stations, and checks the VAT Return boxes. |
What to record
- Each customer's VAT number, CIS status and whether it sells the work on
- Any end user or intermediary notice, its date, and which supplies it covers. HMRC asks you to keep it with your business records.
- For each contract, why you treated it as inside or outside CIS, especially when it mixes servicing with building work
- Any agreement to use the 5% disregard, made at the start of the contract
- The invoice, with the reverse charge wording and the VAT amount, and any credit notes
Reverse charge invoices in Field Suite
- A reverse charge tick on each invoice, shown when your business is VAT registered. It starts ticked for customers you mark as CIS contractors for the reverse charge, unless you have recorded their end user notice, and you can untick it on any invoice.
- The end user or intermediary notice on the customer record, with the date it was received.
- The wording on the PDF: "Reverse charge: Customer to pay the VAT to HMRC. VAT Act 1994 Section 55A applies." On the customer's invoice page the VAT line reads "VAT for you to pay to HMRC (reverse charge)". Either way the VAT is shown for information and left out of the total. Credit notes follow their invoice.
- A reminder next to the tick that it is not for repairs, servicing or inspections on their own, or for end users.
Read the CIS guide, read pricing a PPM contract, see subcontractor and CIS management, planned maintenance software and pump maintenance software, check prices, or book a demo.
Field Suite is job management software, not a firm of accountants. HMRC and your adviser decide how VAT applies to your work.
Questions
Does replacing a commercial boiler use the reverse charge?
Not on its own. HMRC's CIS manual says replacing a central heating boiler does not count as installing a heating system, so it is outside CIS and normal VAT applies. If the same contract includes building work, such as altering the plant room, the whole contract is inside CIS.
Do PPM contracts use the reverse charge?
A contract that is only servicing and maintenance is outside CIS, so no. A contract that also includes any construction operation, such as making good, is inside CIS for every payment under it. Then the reverse charge applies unless the customer is an end user or another test fails.
My customer told me on the phone that they are the end user. Is that enough?
No. The notice must be in writing, by post, email or in a contract, and it must reach you no later than the time of the supply (the 2019 Order, article 8(1A)). Until it arrives, apply the reverse charge if the other conditions are met.
Can I split labour and materials to avoid it?
No. HMRC says labour and the materials supplied with it should not be separated to avoid the reverse charge. If you have two linked contracts with the same customer on the same site and one is inside CIS, the reverse charge applies to both, subject to the 5% disregard.
Sources
- GOV.UK, Check when you must use the VAT domestic reverse charge for building and construction services (last updated 24 September 2020). https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services
- GOV.UK, VAT domestic reverse charge technical guide (last updated 18 September 2024): end users, intermediary suppliers, written notice, 5% disregard, invoices, credit notes, Cash Accounting and Flat Rate schemes, public bodies. https://www.gov.uk/guidance/vat-reverse-charge-technical-guide
- The Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) Order 2019, articles 1, 5, 6 and 8. https://www.legislation.gov.uk/uksi/2019/892
- HMRC, Construction Industry Scheme Reform Manual, CISR14090: building service systems. https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14090
- HMRC, Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340), updated 27 August 2026: paras 2.21, 6.17, A.4, A.11, A.15, A.16 and Appendix C. https://www.gov.uk/government/publications/construction-industry-scheme-cis-340/construction-industry-scheme-a-guide-for-contractors-and-subcontractors-cis-340
- Finance Act 2004, section 74. https://www.legislation.gov.uk/ukpga/2004/12/section/74
- GOV.UK, VAT rates (standard rate 20%, reduced rate 5%). https://www.gov.uk/vat-rates
Last checked: 5 November 2026 against the sources above.
Checked in detail: HMRC VAT reverse charge guidance and technical guide, CIS 340 and the CIS manual (CISR14090), the VAT (Section 55A) Order 2019 and Finance Act 2004 section 74 on legislation.gov.uk, GOV.UK VAT rates.
Field Suite is job management software for UK building services firms, not a consultancy. Your own risk assessments, contracts and advisers decide what applies to your work. Spotted a mistake? Email info@fieldsuiteapp.com and we correct it.