Domestic reverse charge ― mobile phones and computer chips

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Domestic reverse charge ― mobile phones and computer chips
  • What goods are included in the reverse charge?
  • What goods are specifically excluded from the reverse charge?
  • What is the de minimis rule for mobile phones and computer chips?
  • Mixed supplies
  • Multiple invoices are issued
  • Unconditional and contingent discounts or delayed price reductions
  • Disaggregation
  • Accounting for reverse charge VAT
  • Reverse Charge Sales List (RCSL)
  • More...

Domestic reverse charge ― mobile phones and computer chips

This guidance note provides an overview of the reverse charge mechanism that was introduced in the UK in respect of certain goods. This note should be read in conjunction with the Domestic reverse charge ― overview and Domestic reverse charge ― accounting requirements guidance notes.

What goods are included in the reverse charge?

For the purposes of the reverse charge, the definition of a mobile phone takes its everyday meaning in the UK, and this generally means any handset that is capable of being used as a mobile phone (ie to make and receive calls over a cellular network).

The following are deemed to be specified goods under these provisions:

  1. handsets that have a mobile phone function (ie the transmitting and receiving of spoken messages), whether or not they have any other function ― it therefore includes other communication devices, such as Blackberrys and iPhones. With the introduction of smart phones and mobile phone / tablet hybrid devices (‘phablets’), HMRC has stated that it would also see a device as being a mobile phone if:

    1. it has a mobile phone function, and

    2. it has a screen size of five inches or less, measured diagonally from a top corner to a bottom corner, excluding the bezel, or

    3. it falls within 8517 11 00 or 8517 12 00 of Annex I to Council Regulation 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (as amended)

  2. mobile phones supplied with accessories (such as charger, battery cover or hands-free kit) as a single package

  3. ‘pay as you go’ or prepay mobile phones, whether or not the selling price includes an element attributable to the cost of future use of the phones

  4. mobile phones locked to a network but not supplied with a contract for airtime

  5. smart watches with a mobile phone function that are not paired to a mobile phone

  6. computer chips. HMRC states in its guidance

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