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 / services||Implementation date||Relevant guidance note|
|Mobile phones and computer chips||1 June 2007||Domestic reverse charge ― mobile phones and computer chips|
|Carbon emissions allowances||1 November 2010||Domestic reverse charge ― trading in carbon emissions|
|Wholesale gas and electricity||1 July 2014||Domestic reverse charge ― wholesale|