CIOB QS Technician Practice Exam

In the 2022 VAT reverse charge, how do Sub-Contractors' invoices to Contractors present VAT?

They include VAT as a separate line item.

They show VAT charged to the Customer as usual.

They show no VAT charged by the Sub-Contractor.

The VAT reverse charge in construction shifts the responsibility for accounting for VAT from the supplier to the recipient. For subcontractors supplying construction services to contractors, the invoice is issued with no VAT charged by the subcontractor. The price is stated net of VAT, and the invoice should reference the reverse charge so the contractor knows to account for the VAT themselves. The contractor then records both an output VAT (the VAT due on the supply) and an equal amount of input VAT (the VAT they can reclaim, if recoverable). If the customer can reclaim VAT in full, there is no net VAT effect from this transaction, which is why the subcontractor does not include VAT on their invoice.

They include VAT credits for the customer.