Invoicing guide

Reverse Charge Invoice Wording

The exact statement HMRC accepts, what else the invoice has to show, and three complete worked examples — a straight reverse charge job, an end user job with normal VAT, and a mixed labour and materials invoice with CIS on top.

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What a reverse charge invoice must show

A domestic reverse charge invoice is an ordinary VAT invoice with two additions and one subtraction. It still needs everything a VAT invoice normally needs, it gains a reverse charge statement and a note of the VAT the customer must account for, and it loses that VAT from the total the customer actually pays you.

A unique, sequential invoice number and the invoice date, plus the tax point if different.
Your business name, address and VAT registration number.
Your customer's name and address.
A clear description of the work supplied, ideally with labour and materials itemised separately.
The net (VAT-exclusive) amount for each line and the net total.
The reference "reverse charge" — HMRC requires invoices for reverse charge supplies, where the customer is liable for the VAT, to include that reference.
The rate of VAT that would have applied and the amount of VAT the customer must account for, clearly stated but excluded from the total VAT charged.
The total amount due — the net figure, with no VAT added.

The exact wording HMRC accepts

HMRC does not mandate a single form of words. Notice 735 gives these as acceptable examples, and any of them is fine:

reverse charge: VAT Act 1994 Section 55A applies
reverse charge: S55A VATA 94 applies
reverse charge: Customer to pay the VAT to HMRC

Pick one and use it consistently. The safest habit is to pair the legal reference with the plain-English instruction, so nobody in your customer's accounts department has to look it up: "Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC."

Showing the VAT that would have applied

This is the bit most home-made invoice templates get wrong. HMRC's position is that the amount of VAT to be accounted for under the reverse charge should be clearly stated on the invoice but should not be included in the amount shown as total VAT charged. In other words: state it, do not total it.

So a reverse charge line reads something like "Reverse charge VAT at 20%: £240.00 — not included in the total due", and the total due stays at the net figure. If your invoicing system genuinely cannot produce that amount, HMRC allows alternative wording to the effect that "VAT is to be accounted for by your customer at the standard rate of VAT, based on the VAT-exclusive selling price" — but stating the figure is better practice and stops queries.

Three worked invoice examples

All three assume a VAT-registered, CIS-registered electrician invoicing a business customer. The only thing that changes is the customer's status and the mix of the job — and that is enough to change the invoice completely.

Example 1

The reverse charge applies — labour only

Subcontracting second-fix labour for a main contractor who is VAT-registered, reports your payment under CIS, and is selling the work on. No end user notification.

Second fix labour (net): £1,200.00
Materials: £0.00
Net total: £1,200.00
VAT charged: £0.00
Reverse charge VAT at 20% (customer accounts for this): £240.00
Invoice total due: £1,200.00
Less CIS at 20% on labour: − £240.00
Payment you receive: £960.00

Statement on the invoice

Reverse charge: VAT Act 1994 Section 55A applies.

Customer to pay the VAT to HMRC.

Reverse charge VAT at 20%: £240.00 — not included in the total due.

Why: All of HMRC's conditions are met, so no VAT is charged. The £240 is stated so the contractor knows exactly what to declare, but it never enters the total. CIS still comes off the labour on top, which is why £1,200 of work lands as £960 in the bank.

Example 2

End user — charge VAT as normal

A property company having its own offices rewired. It is VAT and CIS registered, but it is not selling the work on, and it has emailed you written confirmation that it is an end user.

Rewire labour (net): £2,000.00
Materials (net): £900.00
Net total: £2,900.00
VAT at 20%: £580.00
Invoice total due: £3,480.00
Less CIS at 20% on labour: − £400.00
Payment you receive: £3,080.00

Statement on the invoice

VAT charged at 20% under normal VAT rules.

Customer has confirmed in writing that it is an end user for the purposes of section 55A VAT Act 1994.

The domestic reverse charge does not apply to this supply.

Why: Written end user confirmation switches the reverse charge off, so this is an ordinary VAT invoice and the £580 is collected from the customer. Note that CIS is unaffected by any of this — it still comes off the £2,000 of labour, never the materials and never the VAT. Keep the customer's written confirmation on file as your evidence.

Example 3

Mixed labour and materials under the reverse charge

Supplying and installing distribution boards and containment for a contractor in the chain. Materials are a big share of the job, and the customer has given no end user notification.

Installation labour (net): £1,400.00
Materials supplied and installed (net): £600.00
Net total: £2,000.00
VAT charged: £0.00
Reverse charge VAT at 20% on the full £2,000 (customer accounts for this): £400.00
Invoice total due: £2,000.00
Less CIS at 20% on labour only: − £280.00
Payment you receive: £1,720.00

Statement on the invoice

Reverse charge: S55A VATA 94 applies.

Customer to pay the VAT to HMRC.

Reverse charge VAT at 20%: £400.00 — not included in the total due.

Why: This is the example that catches people out. The reverse charge applies to the whole invoice value including materials, because goods supplied with construction services are a single supply for VAT purposes — so the stated VAT is £400 on £2,000, not £280 on the labour. CIS goes the other way and comes off the £1,400 of labour only. Two different rules, two different bases, on one invoice.

Credit notes and self-billing

If you have to credit a reverse charge invoice, the credit note needs its own version of the statement. HMRC suggests wording along the lines of "reverse charge: customer to account for the output tax adjustment of −£X to HMRC" so the customer knows to reverse the entry they made rather than simply reduce a VAT-inclusive figure.

Under self-billing the customer raises the document, so the statement is written from their side. HMRC's suggested wording is "reverse charge: We will account for and pay output tax of £X to HMRC". If a contractor self-bills you, check their document carries that statement and the right net figure before you file it — their mistake still shows up in your records.

What your customer does with it

When a contractor queries why there is no VAT on your invoice, this is the answer. They enter the reverse charge VAT as output tax in box 1 of their VAT return, reclaim the same amount as input tax in box 4 on that same return under the normal input tax rules, and put the VAT-exclusive value of the purchase in box 7. For a fully taxable business the two entries cancel out and the cash effect is nil. It does not go in box 6, because it is not their sale.

One consequence for you: reverse charge supplies are excluded from the VAT Flat Rate Scheme. If you are on flat rate and a chunk of your turnover moves to reverse charge work, the scheme may no longer be the better deal.

Wording mistakes worth avoiding

Silence. A net-only invoice with no reverse charge statement is not a reverse charge invoice. The reference must be there.
Stating the rate but not the amount.The VAT figure should be on the invoice unless your system truly cannot produce it, in which case use HMRC's alternative wording.
Rolling the VAT into the total. The reverse charge amount must not be included in the total VAT charged, and must not be in the amount due.
Writing "VAT exempt" or "zero-rated". Neither is true. It is a standard or reduced-rated supply on which the customer, not you, accounts for the VAT.
Applying it because the customer asked you to.The conditions decide it, not the customer's preference — and an end user claim only counts in writing.

Sources

VAT Notice 735: the VAT domestic reverse charge procedure (GOV.UK) — invoicing requirements, accepted wording, credit notes, self-billing, the Flat Rate Scheme exclusion and the box 1 / 4 / 7 treatment.
VAT domestic reverse charge for building and construction services (GOV.UK) — which services are in and out of scope.
VAT reverse charge technical guide (GOV.UK) — end users, intermediary suppliers, written notifications and the 5% disregard.

Guidance, not tax advice. The wording and examples here are a plain-English reading of published HMRC guidance, offered for general information. Figures are illustrative. Check current guidance on GOV.UK or speak to your accountant before changing how you invoice.

FAQs

What wording do I put on a reverse charge invoice?

HMRC accepts any of: 'reverse charge: VAT Act 1994 Section 55A applies', 'reverse charge: S55A VATA 94 applies', or 'reverse charge: Customer to pay the VAT to HMRC'. Whichever you use, the invoice must include the reference 'reverse charge' and must state the VAT the customer has to account for.

Do I show the VAT amount on a reverse charge invoice?

Yes. HMRC says the amount of VAT to be accounted for under the reverse charge should be clearly stated on the invoice, but must not be included in the amount shown as total VAT charged. If your software cannot show the amount, you can instead state that VAT is to be accounted for by the customer at the standard rate of VAT, based on the VAT-exclusive selling price.

What is the wording for a reverse charge credit note?

HMRC's suggested wording is: 'reverse charge: customer to account for the output tax adjustment of -£X to HMRC'. The credit note otherwise carries the same details as any VAT credit note.

What wording is used on a self-billed reverse charge invoice?

Where the customer self-bills, HMRC suggests: 'reverse charge: We will account for and pay output tax of £X to HMRC'. The customer raises the document, so the statement is written from their side.

How does the customer account for reverse charge VAT?

They put the VAT you flagged as output tax in box 1 of their VAT return, reclaim the same amount as input tax in box 4 on that same return subject to the normal rules, and enter the VAT-exclusive value of the purchase in box 7. It nets to nil for a fully taxable business.

Can I still use the Flat Rate Scheme on reverse charge jobs?

No. Supplies that the reverse charge applies to are excluded from the VAT Flat Rate Scheme. If a large share of your turnover becomes reverse charge work, check with your accountant whether the scheme still pays.

Reverse charge checker →Does it apply to this job? Seven questions.CIS deduction calculator →What the contractor actually pays you.VAT for electricians →Which rate applies before any of this.

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