Capability — VAT
VAT domestic reverse charge on construction invoices
Estimark applies the construction domestic reverse charge per customer: flag the client, and every invoice raised for them carries nil VAT plus the statutory wording “Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC.”
Where the reverse charge goes wrong
Charging VAT you should not have charged
The customer will not pay it, the invoice gets credited, and the whole thing is raised again a fortnight later.
The wording is missing
A reverse charge invoice has to say so. An invoice showing 0.00 VAT with no notice is not a compliant invoice.
It applies to sales invoices only
A certified payment application and a retention release are invoices too, and they are the ones that get missed.
It is applied by whoever raised the invoice
If the treatment lives on the invoice rather than the customer, it is right some of the time.
Capability — how it works
How does Estimark decide the reverse charge applies?
It does not decide — you do. The reverse charge is a flag on the customer record, because whether the supply is within CIS and the customer is not an end user is a determination only you can make.
- Flag the client once, and every invoice raised for them inherits the treatment.
- There is one safety check: if your own company has no VAT number on file, the reverse charge is switched off automatically. There is no VAT to shift if the supplier is not registered.
NoteEstimark does not hold end-user or intermediary certificates and does not apply the 5% de-minimis rule. The determination is the flag on the customer.
What does the invoice actually say?
The VAT line reads “VAT @ 20% (reverse charge)” against 0.00, and a notice block below the totals carries the statutory wording.
- The exact wording is: “Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC.”
- The VAT rate is still shown, so the customer can see the rate they must account for.
- Net, VAT and total are stored on the invoice record, not just rendered on the PDF.
Which invoices does it apply to?
All of them. Every invoice in Estimark is priced through one function, so the treatment cannot be right on some routes and wrong on others.
- Invoices raised on job completion.
- Ad-hoc invoices raised directly.
- Quote deposit invoices.
- Certified payment applications and retention releases.
- Recurring invoices and maintenance contract invoices.
Which VAT rates are supported?
The rate comes from your company VAT setting and defaults to 20%. Reduced rate at 5% and zero rate at 0% are both representable.
NoteOne rate per invoice, taken from your company setting. Estimark does not currently produce a mixed-rate invoice with different rates on different lines.
Does Estimark do Making Tax Digital?
No. Estimark does not submit VAT returns and has no MTD integration. What it does is keep the record: net, rate and VAT amount stored on every invoice, per job, for you or your accountant to file from.
- Invoices push to Xero, QuickBooks, FreshBooks and Sage Business Cloud Accounting, which is where the VAT return is normally prepared.
- For Xero, the reverse charge notice is carried through onto the pushed invoice’s reference.
The reverse charge, in numbers
- Statute cited
- VAT Act 1994 s.55A
- VAT charged
- £0.00
- Rate shown
- Still displayed
- Set on
- The customer record
- Supplier check
- VAT number required
- Rates
- 20% / 5% / 0%
- Price
- Included on every plan
Every plan
Included
VAT handling and the domestic reverse charge are part of invoicing. They are not a paid module, and they are on from Solo at £29 a month upward.
What you get
- Per-customer reverse charge flag
- Statutory Section 55A wording on the invoice PDF
- Net, rate and VAT stored on every invoice record
- Applied on every invoice route including payment applications
- Reverse charge notice carried to Xero
CIS deduction is a separate £19-a-month module, included from Pro at £249 a month.
Questions
VAT reverse charge — frequently asked
Does Estimark handle the VAT domestic reverse charge for construction?
Yes. You flag the customer as a reverse charge customer, and every invoice raised for them shows nil VAT with the statutory wording “Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC.” The VAT rate is still displayed so the customer can see the rate to account for.
Does Estimark work out whether the reverse charge applies?
No, and deliberately so. Whether the supply falls within CIS and whether the customer is an end user is a determination for you to make, so the reverse charge is a flag on the customer record rather than something guessed per invoice. Estimark applies one safety check: if your own company has no VAT number, the reverse charge is switched off.
Does Estimark submit VAT returns or support Making Tax Digital?
No. Estimark does not submit VAT returns and has no MTD integration. It stores net, rate and VAT on every invoice and pushes invoices to Xero, QuickBooks, FreshBooks or Sage Business Cloud Accounting, where the VAT return is normally prepared.
Can one invoice carry two different VAT rates?
No. Estimark applies a single VAT rate per invoice, taken from your company VAT setting. Standard rate at 20%, reduced rate at 5% and zero rate are all supported, but not mixed on the same invoice.
Related
CIS compliance
Labour-only deduction, 6th-to-5th tax months, HMRC verification, CIS300 recorded.
Payment applications & retention
Construction Act dates, pay less deadlines and retention release.
For builders & contractors
Pro at £249/month — job costing, payment applications, CIS and site safety.
For sole traders
Solo at £29/month — one user, 15 open jobs, quote and invoice from the phone.
Try it on a real job.
Fourteen days, full access, every plan. No implementation fee.