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Insight · Tax and CIS

End user statements,
and what they switch off.

It has to be in writing, it comes from your customer rather than from you, and without it the reverse charge applies by default. What the statement says and where it belongs.

Published ·5 min read·Written by Unibuild

An end user statement is your customer telling you in writing that it is an end user or an intermediary supplier, which takes the supply outside the VAT domestic reverse charge. It has to come from them, it has to be in writing, and where it has not been given and the other conditions are met, HMRC's position is that the supplier applies the reverse charge.

The default runs the opposite way to most people's instinct

Worth stating first because it is the whole article and it catches out firms every month.

Nobody has to authorise you to use the reverse charge. Where the conditions are met, meaning a CIS-reportable construction supply at standard or reduced rate between two VAT registered businesses, the reverse charge is what applies. Something has to actively stop it, and the only thing that does is a written statement from your customer saying they are an end user or an intermediary supplier.

So if you are holding a verbal assurance, a remark on site, or an assumption based on who the customer appears to be, you are holding nothing. And the exposure is yours rather than theirs, because you are the one deciding how to raise the invoice.

A statement you have not been given is not a neutral position. It is the position in which the reverse charge applies.

Who is an end user, and who is an intermediary supplier

Two definitions, and the distinction between them only matters occasionally.

An end user is a business, or group of businesses, that is VAT and CIS registered but does not make onward supplies of the construction services it receives. The work stops with them. A developer having its own building refurbished is the ordinary example: it is in the CIS chain, but it is not passing the construction service on to anybody.

An intermediary supplier is a VAT and CIS registered business connected or linked to an end user, which buys construction services and resupplies them to that connected end user. Group structures where one company holds the contracts and another occupies the building are where you meet this.

Supplies to either are outside the reverse charge, on the same written notification basis. From your side the practical effect is identical, so the useful question is not which category your customer falls into but whether they have told you in writing that they are one of them.

What the statement has to say

HMRC does not prescribe a form of words, which is why so many firms hesitate over it. What it has to do is be in writing and make the position clear.

A workable statement identifies the customer, states that they are an end user or an intermediary supplier for the purposes of the VAT domestic reverse charge for building and construction services, confirms that normal VAT rules therefore apply to supplies made to them, and asks to be notified if that position changes. Dated and from somebody at the customer with authority to say it.

Two practical points. It can sit in the contract, in an order, or in an email; a separate document is tidier but not required. And it should be capable of covering a continuing relationship rather than one invoice, because collecting one per application is a job nobody will keep doing.

Whose job it is to get one

Formally, the customer's to give. Practically, yours to obtain, because you are the party who carries the consequence of raising the invoice the wrong way.

Which makes this an onboarding task rather than an invoicing one. Ask for it when the order is placed, alongside the other things you collect at that point, and file it against the customer record rather than against a job. A statement that lives in one person's inbox is a statement nobody can find in eighteen months when somebody asks why an invoice was raised as it was.

Where a customer will not give one, the position is straightforward rather than awkward: you apply the reverse charge. That is not a punishment and it is not a negotiating position, it is what the rules require absent the statement. Saying so plainly, in writing, usually produces the statement if they genuinely are an end user, because the alternative costs them nothing to fix.

When the position changes

A customer's status is not permanent. A business that was an end user on one project may not be on the next, if it is passing the construction service on that time.

So a statement should be treated as current rather than perpetual, and reviewed when the relationship changes shape: a new contract, a new project of a different kind, a restructure, or a change in who is contracting. The asking-to-be-notified line in the statement does some of that work, and an annual check does the rest.

This is tax, and the treatment of any particular supply turns on facts specific to it. Take the above as the shape of the rule and settle your own position with your accountant before changing how you invoice.

Where this touches the platform

Unibuild does not decide VAT treatment, which sits with your accounts package and your accountant. Where it helps is the part that actually fails here, which is custody. A customer's end user statement belongs with the customer record and the order rather than in an inbox, and orders in Unibuild carry their terms as structured fields printed on page one with documents attached to the record. That is what makes it possible to answer, eighteen months later, why an invoice was raised the way it was, and to see at a glance which of your customers have given a statement and which have not. It will not chase them for you.

The VAT reverse charge Documents and certificates Subcontractor management Financial and invoicing

Where to start, on Monday

Split your VAT and CIS registered customers into two columns: those who have given you a written end user or intermediary supplier statement, and those who have not. The second column is where your exposure sits, because on every one of those the reverse charge is the default and any invoice raised with VAT added may be wrong.

Then do the mirror exercise. For every supplier invoicing you, are they applying the charge correctly, and have you told them in writing where you are an end user. A firm that has never issued a statement to anybody is almost certainly being invoiced correctly, which is the one comfortable answer this produces.

Asked most often

The follow-up questions.

The full rule, including the conditions and the invoice wording, is in the VAT reverse charge.

What is an end user statement?+
Your customer telling you in writing that they are an end user or an intermediary supplier for the purposes of the VAT domestic reverse charge, which takes supplies to them outside it. An end user is a VAT and CIS registered business that does not make onward supplies of the construction services it receives. Without the written statement, and with the other conditions met, the reverse charge applies.
Does an end user statement have to be in writing?+
Yes. HMRC's position is that the reverse charge does not apply to supplies to end users when the end user tells the supplier in writing that they are one. A verbal assurance, a remark on site or an assumption based on who the customer appears to be does not change the treatment, and the exposure sits with the supplier raising the invoice.
What wording should an end user statement use?+
HMRC does not prescribe a form of words. A workable statement identifies the customer, states that they are an end user or intermediary supplier for the purposes of the VAT domestic reverse charge for building and construction services, confirms normal VAT rules therefore apply to supplies made to them, and asks to be notified if the position changes. Dated, and from somebody with authority to give it.
What if a customer will not give an end user statement?+
You apply the reverse charge, which is what the rules require absent the statement rather than a penalty or a negotiating position. Saying that plainly in writing usually produces the statement if the customer genuinely is an end user, because providing it costs them nothing and the alternative changes how they have to account for the VAT.
Does one end user statement cover every job?+
It should be capable of covering a continuing relationship rather than a single invoice, because collecting one per application is a job nobody keeps doing. But status is not permanent: a customer that was an end user on one project may not be on the next if it passes the construction service on. Review it when the relationship changes shape, and check annually.
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