Commentary

V16.925 VAT—reverse charge for purchases and sales of mobile phones and computer chips

Part V16 Forms and other HMRC material

V16.925 VAT—reverse charge for purchases and sales of mobile phones and computer chips

V16.925 VAT—reverse charge for purchases and sales of mobile phones and computer chips

Information Sheet 08/07, May 2007

1 Introduction

1.1 What this Information Sheet is about

This Information Sheet replaces Information Sheet 06/07, provides further clarification on the new accounting mechanism (the reverse charge) and adds guidance following further discussions with business. Any new information or guidance not included in Information Sheet 06/07 is shown in italics.

The reverse charge will apply, with some exclusions explained below, to supplies of mobile phones and/or computer chips which are—

  1.  

    —     valued at £5000 and over; and

  2.  

    —     made by one VAT-registered business to another.

The reverse charge applies to all such supplies made on or after 1 June 2007.

Under the reverse charge accounting mechanism, it is the responsibility of the customer, rather than the supplier, to account to HMRC for VAT on supplies of the specified goods.

VAT-registered businesses which sell the goods described in section 2 below will need to consider whether the reverse charge applies to their transactions. Businesses which purchase goods to which the reverse charge applies must account for VAT on those purchases to HMRC.

2 To which goods does the reverse charge apply?

2.1 The specified goods.

The specified goods to which the reverse charge applies are—

  1.  

    —     mobile telephones; and

  2.  

    —     computer chips.

2.2 Mobile telephones

For the purpose of the reverse charge, the definition of a mobile phone takes its everyday meaning in the UK and includes—

  1.  

    —     any handsets which have a mobile phone function (ie the transmitting and receiving of spoken messages), whether

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