Agentic UK Domestic Reverse Charge (DRC) VAT compliance service for small construction subcontractors and main contractors (1–20 staff) that produces DRC invoice templates, CIS/VAT interaction schedules, and HMRC VAT return adjustment letters to correct historic DRC errors. Replaces the accountant who charges £400–£1,200 to restructure the subcontractor's VAT invoicing, recalculate the VAT return, and draft the HMRC error correction notification — a process where HMRC estimates thousands of construction businesses are still invoicing incorrectly three years after the DRC was introduced.
Why now
No fresh signals in today's batch; justified by HMRC's continued DRC compliance activity in the construction sector (GOV.UK VAT Notice 735, updated 2024) and persistent errors documented in r/Construction and accountancy forums where subcontractors continue to charge VAT on DRC supplies or fail to account for the CIS/DRC interaction correctly.
Commercial value
~300,000 VAT-registered construction businesses in the UK subject to DRC. Accountants charge £400–£1,200 for DRC restructuring and error correction. HMRC penalty for incorrect VAT accounting is up to 30% of VAT due — strong willingness to pay. At £249 one-off correction pack + £99/mo compliance monitoring, ACV £1,188. Even 500 customers = £594k ARR.
Go-to-market
Target small construction subcontractors via r/Construction, Federation of Master Builders member forums, and direct LinkedIn outreach to directors of 1–20 person groundworks, M&E, and drylining firms. Hook: 'Still charging VAT on your subcontract invoices? HMRC is auditing DRC compliance — get your invoicing corrected and a VAT return fix for £199.' Price: £199 one-off audit + correction pack. First 10 via r/Construction and FMB forums.
2-week MVP
Subcontractor inputs: sample invoices for the past 12 months, VAT return figures, CIS registration status, and whether they supply end-users or intermediary contractors. LLM identifies DRC errors, produces corrected invoice templates, calculates the VAT return adjustment, and outputs a pre-drafted HMRC error correction notification (VAT652). Cut: no accounting software integration, no ongoing invoice processing, no multi-entity handling. Day-1 outcome: subcontractor has corrected invoice templates and a ready-to-file HMRC error correction, avoiding a penalty assessment.
Agent score
0.62 — Commercial score solid: named budget (accountant £400–£1,200), 300k addressable businesses, penalty fear drives urgency; speed high because VAT652 and DRC invoice logic is rules-based and buildable in under 2 weeks, and r/Construction plus FMB forums give direct access to first customers; defensibility below average because the rules are public and replication is straightforward — moat only builds through volume of corrected returns creating template libraries.
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