Value Added Tax

Domestic reverse charge ― overview

Produced by Tolley
  • 21 Dec 2021 16:45

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

  • Domestic reverse charge ― overview
  • What is the domestic reverse charge?
  • What are the specified goods and services covered by the domestic reverse charge?
  • Non-investment gold
  • What supplies are always excluded from the scope of the domestic reverse charge?
  • When does the reverse charge apply?
  • Incidental and bundled supplies
  • Supplies to overseas customers
  • Supplier checks
  • How do you account for the reverse charge?
  • More...

Domestic reverse charge ― overview

This note provides an overview of the domestic reverse charge provisions that have been introduced in order to tackle VAT avoidance in certain perceived ‘high risk’ industries in the UK.

What is the domestic reverse charge?

The domestic reverse charge is an anti-fraud measure that is designed to limit the opportunity for suppliers to charge VAT on supplies made and then fraudulently fail to remit this VAT to HMRC. The domestic reverse charge is only applied to specified supplies of goods and services that HMRC considers more likely to be subject to fraudulent activities. The domestic reverse charge is not the same as the cross-border reverse charge that applies to services received from overseas vendors ― see the Reverse charge ― buying in services from outside the UK guidance note for more information.

Businesses that make supplies covered by the domestic reverse charge must not charge VAT on the supply made. The customer is required to self-account for any VAT due on the VAT return covering the period in which the supply was made.

What are the specified goods and services covered by the domestic reverse charge?

The following supplies come within the scope of the domestic reverse charge:

Specified goods / servicesImplementation dateRelevant guidance note
Mobile phones and computer chips1 June 2007Domestic reverse charge ― mobile phones and computer chips
Carbon emissions allowances1 November 2010Domestic reverse charge ― trading in carbon emissions
Wholesale gas and electricity1 July 2014Domestic reverse charge ― wholesale

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