Commentary

RCB/23/14 VAT—introduction of a domestic reverse charge for businesses wholesale trading in gas and electricity

Part V16 Forms and other HMRC material

RCB/23/14 VAT—introduction of a domestic reverse charge for businesses wholesale trading in gas and electricity

RCB/23/14 VAT—introduction of a domestic reverse charge for businesses wholesale trading in gas and electricity

Revenue & Customs Brief, Issue 22. 29 May 2014

1 Introduction

In this year's Budget the government announced its plans to introduce a reverse charge accounting mechanism (domestic reverse charge) for wholesale supplies of gas and electricity within the UK. This is in response to the threat of missing trader intra-Community (MTIC) fraud in those supplies.

This brief announces the implementation date and publishes the associated draft legislation and guidance on how the domestic reverse charge for wholesale trading in gas and electricity will operate.

2 Who needs to read this?

Businesses registered or liable to be registered for VAT that buy or sell wholesale gas and electricity in the UK.

3 Background

A domestic reverse charge means the customer receiving wholesale supplies of gas or electricity must account for the VAT due on these supplies on their VAT return rather than the supplier. The customer can deduct the VAT due on the supplies as input tax, meaning no net tax is payable to HM Revenue & Customs (HMRC), subject to the normal rules for reclaiming VAT. This removes the scope for fraudsters to steal the VAT due to HMRC and follows similar measures introduced in response to criminal threats for mobile telephones, computer chips and emissions allowances.

4 Timing and scope of implementation

4.1 Timing

The domestic reverse charge will apply to all affected supplies with effect from 1 July 2014. This means that supplies with a tax point on or after that

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