Reducing Your Tax Burden

Reverse Charge for Wholesale Electronic Communications Services

by Berthold Bauer on January 13, 2016

Normally, as a result of the first section in the VAT Act 1994 – a supplier is liable for accounting for VAT on the supplies of goods or services he makes.  However – in certain cases, the customer is responsible for charging themselves VAT on a supply they have received (as outlined in an order made by the Treasury).  This is effectively an anti–fraud measure which reduces the opportunity for fraudsters to charge VAT and then ‘disappear’ before paying it over to HMRC (referred to as Missing Trader Intra-Community Fraud – MTIC).

 The new measure will introduce a reverse charge from 1st February 2016 for wholesale supplies of electronic communication services (that is services of routing telephone calls and associated data over landlines, mobile networks or the internet.  Non-wholesale supplies will remain unaffected by the measure.

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