VATREVCON32500 - How the construction reverse charge works: Who needs to apply the construction reverse charge: Non-established taxable persons and other non-established businesses
Source: gov.uk (2025-04-02)


A non-established taxable person (NETP) is a person who is liable to be registered for VAT under Schedule 1A of the VAT Act 1994. Other than not already being registered, paragraph 1 of Schedule 1A sets three conditions which must be met:
- The person makes taxable supplies in the UK, or intends to do so in the next 30 days
- Those supplies are made in the course or furtherance of a business
- The person has no establishment or fixed establishment in the UK.
For more information on the conditions for being a NETP, please see VATREG37150 (https://www.gov.uk/hmrc-internal-manuals/vat-registration-manual/vatreg37150).

A person who meets those three conditions will not have to register if all their supplies meet the criteria for the reverse charge for services received from outside the UK; they will be non-established but not taxable persons.

For construction services supplies or received by non-established businesses there are two reverse charge measures to consider. Firstly there is the cross-border reverse charge which is explained in the section ‘Reverse charge’ in Place of supply of services (VAT Notice 741A (https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.gov.uk%2Fguidance%2Fvat-place-of-supply-of-services-notice-741a&data=05%7C02%7Ceilis.nibhriain%40hmrc.gov.uk%7C9fb840bc144e4415ac8208dc5de4298f%7Cac52f73cfd1a4a9a8e7a4a248f3139e1%7C0%7C0%7C638488481754831090%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=dlb8Lpetp2O6LHMXpACxB2Tw4we5YQ8umik4fi64Lic%3D&reserved=0)), which is referred to in this section as the 'international reverse charge'.

Secondly there is the domestic reverse charge for building and construction services which is referred to as the 'domestic reverse charge' in this section. If both reverse charges are in play, you should work through the international reverse charge criteria first and if it doesn't apply then look at the domestic reverse charge criteria.

Non-established businesses as suppliers of construction services

When a non-established business supplies construction services in the UK to a UK-established customer the responsibility for accounting for VAT depends on whether or not the customer is registered (or required to be registered) for VAT in the UK:
- If the customer is registered (or required to be registered) for VAT in the UK then they must account for the VAT using the international reverse charge.
- If the customer is not registered (or required to be registered) for VAT in the UK then the non-established supplier must register and account for the VAT under the normal VAT accounting procedures (reverse charge accounting cannot apply where the customer is not VAT registered). Please note that, for businesses not established in the UK, there is no registration threshold for taxable supplies of services (see VAT Notice 741a para 2.6 (https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec2)).
When a non-established business supplies construction services in the UK to another business that is not established in the UK, the responsibility for accounting for VAT will again depend on whether or not the customer is registered (or required to be registered):
- If the customer is VAT registered (or required to be) in the UK, then they must account for the VAT using the domestic reverse charge.
- If the customer is not VAT registered (or required to be) in the UK then the supplier, if not already registered, must register for VAT and charge and account for the VAT under the normal VAT accounting procedure.
Non-established businesses as customers

If a non-established taxable person is registered (or required to be registered) for UK VAT and is not an end user or intermediary supplier the domestic reverse charge will apply on supplies received from both UK-established and non-established VAT-registered suppliers.

If a non-established taxable person fulfils the conditions to be an end user or intermediary supplier, the domestic reverse charge will not apply provided the non-established taxable person notifies the UK-established supplier or non-established supplier of its end user or intermediary supplier status in writing.

If a non-established customer is not registered or required to be registered then their VAT-registered supplier must not use either reverse charge procedure but instead account for VAT as normal.