This is the VAT domestic reverse charge for construction, and your friend is right — you do put the VAT in both Box 1 and Box 4. You pay the subcontractor only the net amount shown on the invoice; no VAT changes hands. Instead, you account for the VAT yourself: work out 20% on the net amount, enter it as output VAT in Box 1 (as if you charged it), and reclaim the same amount as input VAT in Box 4. If you're fully taxable the two cancel out and it's VAT-neutral, but HMRC still wants to see both entries.
The reverse charge applies where a VAT-registered subcontractor supplies specified construction services (partitioning and electrics count) to a VAT-registered customer who isn't the end user — since you're a contractor buying in the services rather than the final client occupying the building, you fall in scope. It's separate from CIS: the CIS deduction is the income tax you withhold from the subcontractor's labour under the Construction Industry Scheme, while the reverse charge is purely how VAT is accounted for. Practically, check three things on every such invoice: that both businesses are VAT-registered, that the work is within scope (building, civil engineering and installation services), and that the invoice states 'reverse charge — customer to account for VAT'. Most accounting software has a reverse-charge VAT code that handles the Box 1/Box 4 double entry automatically.
