On August 18, 2016 the UK HM Revenue & Customs (HMRC) issued a guide titled “VAT: reverse domestic charge for telecommunications services”. According to the HMRC the guide applies to wholesale electronic communications supplies providing speech and associated services. The HMRC also states that the guide explains how VAT invoices will be affected by the reverse charge.
This reverse charge is designed to prevent wholesale supplies of telecommunication services from being exploited for missing trader intra-community (known as MTIC) fraud. It was introduced by the Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) Order 2016.
According to the guide if one is a service carrier in the telecommunications industry, its supplies will be subject to the reverse charge if one makes wholesale supplies to one of the following in the UK:
· other service carriers
· network operators to supply users, such as consumers
It is furthermore explained that one can only use the reverse charge for business to business sales where both businesses are registered or liable to be registered for VAT. However, there are no value thresholds for ones sales.
Where the reverse charge applies, ones customer will account for the VAT instead of you as the supplier.
The guide discusses a.o. the following subjects:
· How the reverse charge applies
o Customers
o Supplies within the charge
o Exclusions
· Multiple supplies
· Invoicing
o Tax points
· Sales list
· Penalties
· Related guidance
Click here to be forwarded to the guide “VAT: reverse domestic charge for telecommunications services” as available on GOV.UK, which will open in a new window.
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