Submit VAT returns with domestic reverse charge software

Apply domestic reverse charge VAT and wording to your invoices and bills, using Xero software. Xero does the MTD VAT return calculations for you, reducing errors and saving time. Start a free 30 day trial with Xero today.

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Supporting you with domestic reverse charge VAT

Automate your bills

Automatically apply the domestic reverse charge to relevant products and services.

Update your invoices

Domestic reverse charge is displayed clearly on your invoices wherever it applies.

Submit VAT returns

Xero automatically calculates domestic reverse charges and completes MTD VAT returns.

The finer details

Xero automatically calculates the input and output tax on items that domestic reverse charge VAT applies to when entering your bills.

Xero automatically shows which items are subject to domestic reverse charge, the VAT rate that applies and tells the customer they must account for the VAT.

Once you're set up for Making Tax Digital, you can account for and submit VAT returns containing domestic reverse charge in Xero's MTD VAT returns.

Manage domestic reverse charge with Xero

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More about domestic reverse charge for building and construction services

What is domestic reverse charge (DRC)?

Domestic reverse charge VAT legislation changes the way CIS-registered construction businesses handle and pay VAT in the UK from 1 March 2021.

See the HMRC guidance on DRC VAT

Submit domestic reverse charge invoices

Subcontractors can send domestic reverse charge invoices using Xero. Xero calculates the amount of CIS to deduct, shows which items domestic reverse charge VAT applies to, and informs the customer they must account for the VAT and at what rate.

See how to send DRC invoices as a subcontractor

Record domestic reverse charge bills

Contractors can enter bills received from subcontractors that are subject to domestic reverse charge. Xero knows that the contractor is responsible for both input and output tax and does the VAT calculations for you.

Setting up tax rates

The domestic reverse charge tax rates are set up in Xero ready to be added to your organisation. They can then be applied as defaults or to specific items in invoices and bills so the correct amounts are reported on the MTD VAT return.

Submitting VAT returns

Xero automatically takes care of filling in the right boxes and completing MTD VAT returns for both the sales invoices you send and the bills you receive.

See how to submit an MTD VAT return