Many contracts pay the contractor an advance (often 10% to 20% of the contract sum, against an advance payment guarantee) to fund mobilisation. The employer then recovers it in instalments, usually a fixed percentage of each certificate, until the full advance is repaid.
Because VAT is normally accounted for when the advance is received, the recovery reduces the taxable value of later certificates rather than being taxed twice. Getting this wrong is one of the commonest VAT errors on contractor invoices.
How Civova handles it
Civova records the advance recovery on each certificate and reduces the taxable base of the resulting invoice accordingly, while retention reduces only the payment.