Domestic reverse charge ― wholesale electronic communication services

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 ― wholesale electronic communication services
  • Background
  • Supplies included
  • Supplies excluded
  • Practical points

Domestic reverse charge ― wholesale electronic communication services

This guidance note provides an overview of the scope of the domestic reverse charged applied in respect of wholesale electronic communication services. This note should be used in conjunction with the Domestic reverse charge ― overview and Domestic reverse charge ― accounting requirements guidance notes.


HMRC announced that the scope of the reverse charge is extended to cover supplies of wholesale telecommunication services, including satellite, in the UK with effect from 1 February 2016. The changes will impact the following types of businesses:

  1. airtime carriers

  2. network operators

  3. message hubbing providers

  4. short messaging service (SMS) and voice aggregators

VATA 1994, ss 1(2), 55A; Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) Order 2016, SI 2016/12; Revenue and Customs Brief 1 (2016); VAT notice 735, para 3.7

The changes are applicable to the wholesale buying and selling of telecommunication services in the UK. The term ‘wholesale’ will mean business-to-business supplies where the receiving business intends to resell the supply with no or negligible consumption of the supply by the businesses concerned. With respect of supplies of telecommunications services, the term ‘wholesale’ means supplies between carriers of these services within the UK, or supplies of these services to network operators for onward supply to the consumer or user of the underlying telecommunication service.

The changes impact telecommunication services which typically mean transmission or carriage services of airtime and telephony related data. The reverse charge applies to telecommunications services which enable speech communication instantly or with only a negligible delay between the transmission and the receipt of signal or the transmission of images, information, sounds or writing of any nature when given in connection with these services.

Supplies included

According to HMRC guidance, the following supplies are covered by the reverse charge (this list is not exhaustive):

  1. airtime ― mobile telephony usage, including roaming agreements

  2. voice interconnect ― the services of handling calls for other operators

  3. Voice Over Internet Protocol (VOIP) ― charges for voice

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