This guide will explain how to account for and record a Domestic Reverse Charge (DRC) for building and construction services transactions. The customer receiving the service supplied at the standard or reduced rates and will include materials within the service will have to pay the VAT due to HMRC instead of paying the supplier.


It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers). You can toggle this feature on by following this guide.

Step 1.

Domestic Reverse charge will apply to both sales and purchases; in each case will show the VAT amount subject to reverse charge. In this guide, we will demonstrate with purchases. First, head to Purchases > Bills > Create Bill.  

Step 2.

Select Domestic Reverse Charge under the VAT Treatment drop down. This will apply the DRC treatment to the whole bill - it is not possible to apply DRC to line items.

Step 3. 

Save the bill. This completes the recording of a DRC bill. 

Please note that the DRC VAT charge will be paid by the customer receiving the specified service to HMRC instead of the supplier.

Step 4.

The bill will now appear on the VAT return within boxes 1 and 6 for sales, or boxes 4 and 7 for purchases.

This completes the creation of a DRC bill.

Technical support is available from Monday to Friday, 9 - 5.

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