The measure

The VAT reverse charge provisions will be amended so they can be applied to services. This measure will be used to introduce a reverse charge for supplies of emissions allowances.

Under current provisions to combat Missing Trader Intra-Community (MTIC) fraud, taxpayers purchasing certain goods (mobile phones and computer chips) are required to account for and pay VAT on their purchases instead of the supplier. This provision is being amended so that it can be applied to services. The precise services to which it will apply will be specified in secondary legislation.

The reverse charge will replace the interim zero-rating for these services which was introduced on 31 July 2009.

The measure also includes an option to introduce reporting requirements. However, there will be no additional reporting requirements in respect of emissions allowances, so suppliers will not be required to submit reverse charge sales lists for these supplies.

Who will be affected?

Any business supplying or purchasing emissions allowances.

When?

The reverse charge for emissions allowances will apply from 1 November 2010, from which date the zero-rating for supplies of emissions allowances will be withdrawn.