Domestic reverse charge ― mobile phones and computer chips

Produced by Tolley
Domestic reverse charge ― mobile phones and computer chips

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
  • Mobile phones and computer chips
  • Specifically excluded
  • VAT treatment
  • £5,000 de minimis limit
  • Accounting for reverse charge VAT
  • Reverse Charge Sales List

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

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 Missing trader intra-community fraud guidance note.

HMRC has also introduced other anti-avoidance domestic reverse charge measures, and more information can be found in the following guidance notes:

  1. Domestic reverse charge ― trading in carbon emissions

  2. Domestic reverse charge ― wholesale trading in electricity and gas

  3. Domestic reverse charge ― wholesale electronic communication services

  4. Domestic reverse charge ― supplies of building and construction services

  5. Domestic reverse charge ― trading in renewable energy certificates

Mobile phones and computer chips

HMRC has requested an EU derogation in order to combat MTIC fraud taking place in the UK, and presently the supply of certain specified goods between two UK VAT registered businesses is liable to VAT under the reverse charge. This change was the result of the decision reached in Bond House Systems Ltd v C & E Comrs. Please note that HMRC’s derogation in respect of mobile phones and computer chips was effectively replaced by 2013/43/EU with effect from 15 August 2013. HMRC had stated that the UK would continue to apply the reverse charge to mobile phones, computer chips and emissions allowances until at least the end of 2018 when the amendments made by 2013/43/EU were due to expire. However, this temporary measure has now been extended to 30 June 2022 under Council Directive (EU) 2018/1695, effective from 2 December 2018.

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