Domestic reverse charge ― wholesale trading in electricity and gas

Produced by Tolley
Domestic reverse charge ― wholesale trading in electricity and gas

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

  • Domestic reverse charge ― wholesale trading in electricity and gas
  • Background
  • Supplies included
  • Supplies excluded
  • Power Purchase Agreements (PPA)
  • Power Purchase Agreements (PPA)
  • Practical points

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 scope of the domestic reverse charged applied in respect of wholesale trading in electricity and gas. See the Domestic reverse charge ― accounting requirements guidance note for details regarding what information needs to be shown on the VAT invoice and how to account for the reverse charge.


In Budget 2014, the Government announced that it was intending to implement changes to the way in which output tax is accounted for on wholesale supplies of electricity and gas within the UK. From 1 July 2014, the domestic reverse charge must be used in order to account for VAT due on these types of supplies in order to combat increasing MTIC fraud.

Supplies included

The domestic reverse charge applies to all wholesale supplies of gas and electricity made between two UK parties unless the supply falls into one of the exemptions outlined below. This usually means a wholesale supply between two UK parties under trading contracts such as the European Federation of Energy Traders contracts, National Grid Master contracts etc and over-the-counter or spot contracts where:

  1. supplies of gas through a natural gas system situated within the territory of an EU member state or any network connected to this system

  2. supply of electricity

The domestic reverse charge is not applicable to supplies of gas or electricity made under a supply licence or metered supplies to domestic and business premises for their own consumption. VAT registered businesses that do not resell electricity and gas will not be

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