VATREVCON33100 - How the construction reverse charge works: End users and intermediary suppliers: End users
Source: gov.uk (2025-04-02)


The end user and intermediary suppliers concepts were introduced to enable groups of businesses who were contractors under the CIS, and were consumers of construction services, to be excluded for the reverse charge if they wished to be. This came about as a result of feedback in the consultation process that, although these businesses are caught by the CIS, they are often infrequent users of construction services (e.g. housing associations) and applying the reverse charge for a small amount of their supplies would represent a large administrative burden.

For the purposes of the construction reverse charge, an 'end user' is a taxable person who buys specified services and uses those services for any purpose other than making further supplies of specified services, as set out in SI 2019/892 art. 2(1) (https://www.legislation.gov.uk/uksi/2019/892/article/2). Therefore, for the purposes of this reverse charge, the term 'end user' has a specific legal meaning and should not be confused with any other uses of the term 'end user'.

A business qualifies as an end user where is buys services that are subject to the reverse charge and it:
- is VAT registered,
- is obliged to process its payments to subcontractors through the CIS, and
- does not make onward supplies of the building and construction services that they receive.
Building contractors are not end users because they make onward supplies of construction services. There will not always be an end user (for reverse charge purposes) in each construction supply chain. The term ‘end user’ does not simply refer to the last customer in a supply chain; it has a specific meaning in terms of the construction reverse charge, as described at the start of this section.

For example, if services are provided to a private domestic customer, the reverse charge does not apply because the customer will not be VAT registered. This does not mean that the contractor supplying the householder becomes the end user, because it will still be making onward supplies of construction services. Supplies made to this contractor by subcontractors will therefore still be subject to the reverse charge if the other conditions are met.

The 'end user' concept is only relevant where the supplies would ordinarily be subject to the reverse charge, so somebody who is not required to report payments through the CIS does not need to consider whether or not they qualify as an end user because the reverse charge would not apply anyway.

The reverse charge does not apply for supplies (which would otherwise be subject to the construction reverse charge) to end users when the end user tells their supplier or building contractor in writing that they are an end user. Once an end user notification has been made it is not necessary for the contractor to ask for any further details like VAT and Construction Industry Scheme registration status.

It is not compulsory for a trader who is eligible to be an end user to ‘opt out’ of the reverse charge; they can choose not to notify their supplier or building contractor of their end user status, in which case the reverse charge will apply to the supply.

A supplier can include a statement in their terms and conditions to say they will assume that their customer is an end user or intermediary supplier unless they say they are not. This places a responsibility on the customer to respond if they are not an end user. Where the customer has signed a contract where such a provision is included in the terms and conditions, this means they have provided a written end user notification.

If a supplier believes their customer is an end user but the customer has not provided a written end user notification, they should still apply the reverse charge rather than charge VAT under normal rules. This is because the obligation to notify end user status lies with the customer.

A customer may qualify for end user status at one point but this then may change; for example, in the case of 'golden brick' transactions (see VCONST03540 (https://www.gov.uk/hmrc-internal-manuals/vat-construction/vconst03540)), the sale of the freehold will mean that the developer no longer qualifies for end user status from the date of the sale.

Snagging works and the reverse charge

Snagging works are remedial works to correct faulty workmanship or replace faulty materials.

Although contractors may not charge their customers for carrying out the snagging works, it does not mean that they then qualify as end users. This is because any work they subcontract relates to the original contract for supplies of construction services to their customer.

The reverse charge treatment of snagging works always corresponds to the reverse charge treatment of the underlying supply.

Where a developer with end user status has remedial work done on a building it developed, it continues to be an end user even if it no longer owns the building.