Domestic reverse charge ― trading in renewable energy certificates

Produced by Tolley
Domestic reverse charge ― trading in renewable energy certificates

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

  • Domestic reverse charge ― trading in renewable energy certificates
  • Background
  • What are renewable energy certificates?
  • Supplies that are always excluded from the scope of the domestic reverse charge
  • Certificates are supplied as part of a power contract or agreement
  • Preparing for the introduction of the reverse charge

This guidance note provides an overview of the scope of the domestic reverse charge applied in respect of trading in renewable energy certificates. See the Domestic reverse charge ― accounting requirements for information on what information needs to be shown on the VAT invoice and how to account for the reverse charge.

Background

The reverse charge mechanism for businesses trading in renewable energy certificates has been introduced with effect from 14 June 2019 and applies to the buying and selling of renewable energy certificates in the UK from that date.

HMRC appreciates that these changes have been introduced with little notice and has therefore stated that it will apply a ‘light touch’ when dealing with errors that occur within the first six months of the changes being implemented, providing that the business has tried to comply with the revised legislation and has acted in good faith. Errors must be corrected as soon as possible after discovery and HMRC will consider penalties where it considers that the business has deliberately tried to avoid accounting for VAT correctly.

What are renewable energy certificates?

These are certificates that are issued to electricity and gas generators when they produce renewable energy. These certificates can be trad

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