Forexinfo reverse charge
UK uses cookies to make the site simpler. Find out more about cookies. This publication is licensed under the terms of the Open Government Licence v3. To view this licence, visit nationalarchives. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at https: This notice cancels and replaces Notice February Details of any changes to the previous version can be found in paragraph 1. Place of supply of services before 1 January A: Place of supply of services - from 1 January The VAT reverse charge procedure is an anti-fraud measure designed to counter criminal attacks on the UK VAT reverse by means of sophisticated fraud. It is not to be confused with the reverse charge for intra community acquisitions, details of which are found in Notice A. This notice explains the VAT reverse charge reverse, which applies to the sale and purchase of specified goods and services. This notice assumes that you have a working knowledge of basic VAT principles, as outlined in Notice The VAT guide. For the purpose of the reverse charge, the definition of a mobile phone takes its everyday meaning in the UK. Generally this means any handsets which have a mobile phone function i. It therefore includes other communication devices, such as Blackberrys. The terminology surrounding computer chips can be confusing. As a guide, all computer chips covered by the reverse charge fall within commodity code The reverse charge applies to such items when they are in a state prior to integration into end-user products, or where they are sold separately and not as part of an assembled item, for example a motherboard. Items such as computer servers, laptops, desktop units or tablets are excluded from the scope of the reverse charge. Subject to certain exceptions see paragraphs 3. This typically means wholesale supplies between UK counterparties under trading contracts for example European Federation of Energy Traders contracts, Grid Trade Master Agreements and National Balancing Point contracts and over the counter or spot contracts of:. Supplies to power stations and Combined Heating and Power plants will only be included in the reverse charge reverse they are made by way of trading rather than for consumption only. Sales of electricity made under a PPA or similar agreement may or may not be subject to the reverse charge depending on their wholesale features. Electricity sold under such an agreement will not be regarded as wholesale and therefore will not be subject to the reverse charge where:. Similarly, if your generated power is sold under a PPA or similar agreement to the NFPA, NFPA Scotland Ltd or NFPA Services Ltd and the generated power is not allocated to your production account with Elexon or generation account with SEMO, that power is excluded from the reverse charge. The sale of the power by the NFPA by auction is also excluded from the reverse charge. Where the supplies are incidental to a reverse charge supply then they will also be subject to the reverse charge. The reverse charge will not apply to supplies of gas and electricity made under supply licence or metered arrangements to domestic and business premises supplies for consumption. VAT registered businesses that do not resell or trade the gas or electricity will not be affected. Unless the supply is incidental to a reverse charge supply, the reverse charge will not apply to:. Only those compliance market credits charge can be used to meet obligations under the EU Emissions Trading Scheme EUETS are subject to the reverse charge mechanism. Forexinfo of specified goods or services in the following circumstances are always excluded from the reverse charge procedure:. It is the responsibility of the customer, rather than the supplier, to account to HM Revenue and Customs HMRC for VAT on supplies of the specified goods or services. If you are selling specified goods and services you should read paragraphs 7 and 9. If you are buying these specified goods and services you should read paragraph 8. The de minimis limit only applies to supplies of mobile phones and computer chips, it does not apply to supplies of gas, electricity or emissions allowances, no matter what the value. The de minimis limit is calculated on an invoice basis, i. However, there are specific circumstances when the total value of individual invoices will determine whether the reverse charge should be applied. This is dealt with in paragraphs 6. Since the de minimis limit only applies to mobile phones and computer chips you will have to separate these supplies out for the purposes of applying the de minimis limit. In reality most suppliers put their reverse charge supplies on separate invoices as it is clearer who has to account for the output tax. If an itemised charge relates to a single supply, for example a computer, which is not subject to the reverse charge, VAT should be charged as normal on the supply, even if some of the itemised components are reverse charge goods. In many business to business transactions, several separate invoices may be issued in relation to a single purchase order, e. Where the single purchase order value is larger than the individual invoice value, it will be acceptable to apply the reverse charge to all invoices relating to the single purchase order so long as:. However, where a single invoice is issued for a supply, then, as normal, the total VAT exclusive value of the invoice should be reviewed to determine whether the de minimis applies. Where VAT is due on a value reduced by an unconditional discount then the discounted value is to be used to establish the value for the purpose of applying the de minimis rule. However, where there are contingent discounts or a delayed reduction in price, the full value shown on the invoice is to be used. Further information on the definition of these discounts can be found in Notice Where you wholesale mobile phones or computer chips and believe that your customer is seeking to disaggregate the supplies you should read paragraph 9. The rules and procedures for dispatches of goods to persons in another Member State and for exports outside the EU are unaffected by the reverse charge. Paragraph 9 gives guidance about the checks you should undertake for this purpose. Where you make a supply of specified goods or services to a customer who is not VAT registered or is not liable to be registered for UK VAT the reverse charge procedure does not apply. In such instances VAT should be applied in the normal way. The following examples fulfil the legal requirement:. When making a sale to which the reverse charge procedure applies, you must show all the information normally required to be shown on a VAT invoice and must also include a reference on the invoice to make it clear that the reverse charge applies and that your customer is required to account for the VAT. Unless otherwise agreed with HMRCthe amount of VAT to be accounted for under the reverse charge must be clearly stated on the invoice but should not be included in the amount shown as total VAT charged. If you produce invoices using an IT system, and that system cannot show the amount to be accounted for under the reverse charge, then the wording should state that VAT is to be accounted for by your customer at the standard rate of VAT, based on the VAT exclusive selling price for the reverse charge goods or services. However, your customer must be able to identify the reverse charge goods or services, and a legend such as the following may be helpful:. HMRC will allow the use of electronic invoices that use a coded representation rather then textual form provided that the content can be demonstrated to an HMRC auditor by both parties to the electronic invoicing exchange. This is subject to the agreement of both parties. Where you make a reverse charge supply you must include the VAT-exclusive value charge that supply in the total value of sales in box 6 of your VAT return - there is no output tax to include in box 1, because that is the responsibility of your customer. Where you have made a reverse charge supply of mobile phones or computer chips but not gas, electricity or specified services you must notify HMRC when you first do so, and complete a reverse charge sales list when you submit your VAT return. This is explained more fully in paragraph If you are a UK VAT-registered business, or are liable to be registered reverse UK VAT, and have not been charged VAT because the reverse charge procedure applies, you must account for the VAT due on the supply. The amount of VAT should be shown on the VAT invoice issued by your supplier see paragraph 7. You forexinfo account for the VAT on the VAT return for the period in which you received the supply. The normal tax point rules apply for determining when the supply is made and received. You may reclaim this VAT as input tax on the same return as it is accounted for, subject to the normal rules, including any partial exemption restriction that may apply see paragraph 8. If the goods or services are sold in any other circumstances, then the appropriate normal VAT accounting rules for the transaction must be followed. This includes submission of an EC Sales List in respect of goods supplied to a customer in another Member State where applicable, and completion of the RCSL see paragraph That value should therefore be included both in calculating the value of taxable supplies in the previous 12 months or less, and in the expected value of taxable supplies in the next 30 days alone, for the purpose of applying these tests for liability to register for VAT. Therefore if you purchase gas, electricity or emissions allowances below this amount each month you will not have to take them into account. If you receive goods and services that fall into the category specified for reverse charge purposes from entities located outside the UK the domestic reverse charge will not apply. However, if you then supply those goods you should read paragraphs 7, 8. You must enter the output tax payable on purchases under the reverse charge in box 1, but the VAT exclusive value of the purchases must not be entered in box 6. Input tax may be reclaimed, subject to the normal rules, by including it in the total shown in box 4. The VAT exclusive value of the purchases should be entered in box 7 in the normal way. Failure to apply the reverse charge may arise as an oversight or where you have been unable to provide your supplier with a VAT registration number because a number is still awaited from HMRC. You might also incur penalties and interest. Given that the reverse charge is there to prevent VAT being stolen in the supply chain, failure to notify your supplier that the reverse charge should be applied will be viewed by HMRC as suspicious. If you take no action to correct the situation when the reverse charge should apply you may put yourself in a position where:. But for the reverse charge to apply, the goods or services must also be sold to a taxable person for a business purpose, and you may not have first hand knowledge of your customer or his VAT status. This section provides guidance to you as a supplier about the checks charge are expected to make. It should be remembered that the reverse charge is only be applied on business to business supplies of specified goods and services. Whilst it covers both wholesale and retail supplies, in reality most retail sales should be unaffected. The checks suggested in paragraph 9. Clearly there are fewer long term relationships with customers in the retail sector and so commercial checks and other checks to prevent fraud or money laundering may be more relevant but there will be situations, for example repeat or pre-ordered bulk sales to business customers, where the checks in paragraph 9. HMRC would expect this to be the norm for most retail sales. Where a customer is VAT registered but is trying to disaggregate its purchases to avoid the reverse charge see paragraph 9. They should also note that some retailers have a strict policy on issuing amended invoices, and forexinfo it is recommended that a valid VAT invoice is requested at the time of purchase. Details of what constitutes a valid VAT invoice can be found in paragraphs On supplies of specified goods or services to non-business customers VAT should always be charged in the normal way. A business, or part of a business, that only makes incidental retail sales is not reverse as a retailer for the purposes of this paragraph. What is reasonable in any case will depend on norms in the sector and the type of relationship you have with your customer. They should not be taken as an exhaustive or definitive list. There is further advice in Notice relating to the integrity of a supplier and this applies equally to that of the customer. You should keep evidence of the checks you have performed, so they can be produced to HMRC if required. If you cannot be satisfied of the bona fides of your customer or the status of his VAT registration then you must consider whether you should proceed with the transaction. If you proceed with a reverse charge transaction where there are doubts that the reverse charge applies, you may wish to consider asking your customer for a deposit equivalent to the output tax for which he will become liable if the reverse charge is applied in error. This may be especially helpful if your customer has applied for but not yet received a VAT registration number. Any deposit taken in these circumstances can be refunded when evidence of the VAT registration number is received. Where you have undertaken reasonable checks, as outlined in paragraph 9. Where you have reasonable doubts about whether your customer is VAT registered but is seeking to disaggregate you must charge VAT at the standard rate. If you apply the reverse charge and have taken sufficient steps to check the bona fides of your customer but have been deliberately misled by them, then you will reverse be required to account for output tax on the sale. Similarly, if you have correctly applied the reverse charge to a sale, then you will not be required to account for output tax if your customer fails to do so. If you apply the reverse charge incorrectly or have not taken sufficient steps to check the bona fides of your customer then you will be liable to pay the output tax on the sale. If you incorrectly charge VAT when the reverse charge should have been applied then your reverse will be assessed for the output tax which will offset any entitlement to input tax recovery. You will then have to credit your customer with the VAT, returning any money collected as VAT. Where a supplier offers a credit or contingent discount, if both parties agree the concession in paragraph In the case for a supply of mobile phones or computer chips, where this option is used adjustments will still be required to the Reverse Charge Sales List see paragraph HMRC believes the complexities involved in making adjustments are likely to make this the easiest option, but the other methods are set out in paragraphs Adjustments could be required, for example because of changes in price after the invoice has been issued, or because of returned goods. The customer adjusts both their output tax and input tax accounts under Regulation 38 of the VAT Regulations if:. The supplier adjusts their output tax and the customer adjusts both their output tax and input tax accounts under Regulation 38A of the VAT Regulations if:. In all circumstances, the object of the adjustment is to bring the correct amount of VAT to reverse. If both parties agree, the original VAT treatment need not be reversed although for goods an adjustment to the Reverse Charge Sales List will still be required see paragraph If they do not agree, the supplier will need to charge output tax to account and collect the VAT due on the supply from his customer. The customer will need to reverse the output tax he has entered and correct the input tax entry to reflect the corrected value. In this case, we recommend the whole of the original supply is credited and then re-invoiced by the supplier in the normal way, showing the VAT chargeable on the supply. Credit and debit notes record an adjustment to the original supply and their treatment depends on whether the reverse charge applied in the first instance. Where the output tax liability reverts to the supplier as a reverse of a decrease in consideration, as noted above, we recommend the whole supply is credited and then re-invoiced by the supplier in the normal way. If using credit notes the following would also be acceptable:. As some businesses may be required to account for output tax on their purchases as well as on the onward sale to non-business customers, the reverse charge may have the effect of increasing their net VAT liability. This can have the effect of bringing them within the scope of POA, or charge increasing their monthly payments if they are already within the regime. The POA regime has been amended to allow affected businesses to apply to HMRC to exclude the output tax due under the reverse charge from the calculation to establish whether a business is subject to POA or the monthly payments a business in POA has to make. Applications for such exclusion should be made charge. Payment on Account Team 4th Floor Regian House James Street Liverpool L75 1AD. Some businesses may find that their net liability will decrease under the reverse charge. If that is the case, then the normal rules outlined in paragraph 3. Bad debt relief does not apply with reverse charge supplies as it is the customer who accounts for the tax. However, where the customer has to adjust input tax recovery because part or all of the consideration is unpaid forexinfo 6 months perhaps because of a disputed chargethen they may make a corresponding adjustment reducing the output tax accounted for. Under a VAT self-billing arrangement it is the customer who issues the invoice on behalf of the supplier for the supplies he has purchased and received from the supplier. The reverse forexinfo does not affect the self-billing procedure itself. Reverse is the responsibility of the business issuing the self-billed invoice to apply the revised accounting procedure. If the reverse charge applies then the purchaser will be the person issuing the invoice and accounting for the VAT on the supply. The invoice should not charge VAT and should indicate charge the purchaser will be accounting for the VAT itself. However, for goods the supplier reverse be required to complete the Reverse Charge Sales List - see paragraph Alternatively, any of the following are also acceptable, provided that the amount of VAT is shown elsewhere on the invoice but not in the box for total output tax charged:. Supplies to which the reverse charge applies are excluded from the Charge Rate Scheme. Any such supplies received and made should be accounted for under the reverse charge provisions. Businesses using the cash accounting scheme should exclude sales and purchases to which reverse reverse charge applies from the scheme. These supplies should be accounted for under the reverse charge provisions. However, if a business purchases goods and services to which the reverse charge applies and sells them on so that it does not e. The annual accounting scheme is unaffected by the reverse charge and can be used in the normal way with reverse charge supplies being accounted for within the scheme. The forexinfo scheme is one which businesses can elect to use for the sale of eligible goods. If you use it for eligible second-hand mobile phones and computer chips the reverse charge does not apply and the VAT payable is calculated under the margin scheme rules. These types of organisations may purchase goods and services to which the reverse charge applies which will be used partly for business purposes and partly for non-business purposes. In such cases, the reverse charge applies as normal. The customer should account for output tax under the reverse charge mechanism and apply the appropriate restriction to the deduction of the resulting input VAT. Where supplies of goods and services subject to the reverse charge are made to the NHS and government departments for any element of business purpose then the reverse charge applies as normal. The customer should account for the VAT and restrict the recovery of the input tax as appropriate. RCSLs only apply if you make supplies of mobile phones or computer chips - referred to here as reverse charge sales. You must not include supplies of gas, electricity or specified services. If you make reverse charge sales you must notify HMRC and submit regular RCSLs using the RCSL system. Your accounts software may have the facility to export the required data, in the required format, for you. Alternatively you have the option to key the required information into a web page. You must tell us of the date on which you first make a reverse charge sale. You must also give us the name and telephone number of a contact. If you then cease to make such supplies you must tell us of the date on which you ceased to do so. However, if you subsequently again make reverse charge sales you must notify us of forexinfo date you recommenced, and again provide contact details. If you fail to notify us of an event in time you could find yourself liable for penalties, which are calculated on a daily basis see paragraph The RCSL system, including notifications, is web-based and accessed through the HMRC website: If you do not already use an HMRC online service, you will first need to register for the Government Gateway. Guidance on how to register is available at Government Gateway - Home. The RCSL system is menu driven and provides help for each option. All aspects require completion electronically. If you fail to submit your RCSL you will be charged a penalty calculated on a daily basis paragraph This means, for example, that if you are to submit a quarterly RCSL for January, February and March you must tell us, for each customer, three values — one each for January, February and March. You will only be able to make one such entry per customer per VAT period. This means that your data must be aggregated for each month and you will not be able to submit invoice or transaction level data. You may either enter the information directly on-line or you can upload a comma separated values CSV file. Your accounts software application may have the facility to export the CSV file from your system. Please contact your software vendor for further clarification. Details on charge file specification are available on www. You must aggregate the values of all the reverse charge sales for the customer in the month, including any adjustments. You declare the whole pound amount only, and you may either round to the nearest pound or truncate the pence. Likewise, if the total net value is negative you must submit the information with a leading negative sign, e. If you have submitted your RCSL and then find you have made forexinfo mistake you will need to give us the correct information by amending your original submission. If you have submitted your RCSL by completing the on-line list you will be able to add, delete or change lines on-line. If you submitted your RCSL by uploading a CSV file you must resubmit your complete list with the necessary additions, deletions or changes, i. If you do not make any reverse charge sales in a particular VAT period you must submit a nil declaration. There is no facility to submit a nil CSV file. If you fail to submit your RCSL you will be charged a penalty calculated on a daily basis - see paragraph You must not submit an RCSL for supplies of specified services. The RCSL is only for supplies made of specified goods. If you receive supplies of specified goods you must not complete and submit an RCSL. Only those who make supplies of specified goods must complete and submit an RCSL. If you fail forexinfo submit your RCSL you will be charged a penalty calculated on a daily basis, for a maximum of days, which increases as each further default forexinfo, at the following rates:. Your Charter explains what you can expect from us and what we can expect from you. For more information forexinfo to Your Charter. Please note this address is not for general enquiries. For general VAT enquires please phone our helpline or Textphone The helpline is open 8am to 6pm, Monday to Friday, but closed weekends and bank holidays. If you are not satisfied with our service, please let the person dealing with your affairs know what is wrong. We will work as quickly as possible to put things right and settle your complaint. If you are still unhappy, ask for your complaint to be referred to the Complaints Manager. For more information about our complaints procedures go to www. HMRC is a Data Controller under the Data Protection Act We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them. We may get information about you from others, or we may give information to them. If we do, it will only forexinfo as the law permits to:. We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We charge not give information to anyone outside HMRC unless the law permits us to do so. For more information go to www. All content is available under the Open Government Licence v3. Skip to main content. Home VAT Notice VAT domestic reverse charge on specified goods and services. Notice VAT Notice Foreword This notice cancels and replaces Notice February Place of supply of services - from 1 January 1. This notice has been updated to: The law The relevant law relating to the reverse charge on specified goods and services is set out in: Section 55A of the Value Added Tax Act as amended Sections 65 and 66 of the VAT Act in relation to penalties with regard to the Reverse Charge Sales List RCSL Regulations 23AD of Part IV of the VAT Regulations in relation to the RCSL as amended Value Added Tax Section 55A Specified goods and services and excepted supplies Order and Value Added Tax Section 55A Specified Goods and Services and Excepted Supplies Order 3. To which specified goods and services does the reverse charge apply? The specified goods to which the reverse charge applies are: A reverse charge definition for each of these is set out in the following paragraphs. The reverse charge also covers: The reverse charge does not apply to the following: Central Processing Units or CPUs discrete integrated circuit devices, i. Microprocessors or Microprocessor Units MPUs and Microcontrollers or Microcontroller Units MCUs ; and chipsets - the dedicated cluster of integrated circuits which support MPUs The reverse charge applies to such items when they are in a state prior to integration into end-user products, or where they are sold separately and not as part of an assembled item, for example a motherboard. This typically means wholesale supplies between UK counterparties under trading contracts for example European Federation of Energy Traders contracts, Grid Trade Master Agreements and National Balancing Point contracts and over the counter or spot contracts of: Electricity sold under such an agreement will not be regarded as wholesale and therefore will not be subject to the reverse charge where: Unless the supply is incidental to a reverse charge supply, the reverse charge will not apply to: Supplies excluded from the reverse charge Supplies of specified goods or services in the following circumstances are always excluded from the reverse charge procedure: How does the reverse reverse work? The reverse charge only applies to the sale and purchase of specified goods and services: The de minimis rule for mobile phones and computer chips 6. Where the single purchase order value is larger than the individual invoice value, it will be acceptable to apply the reverse charge to all invoices relating to the single purchase order so long charge What if I make a reverse charge supply? The following examples fulfil the legal requirement: VAT Act Section 55A applies Reverse charge: S55A VATA 94 applies Reverse charge: Customer to pay the VAT to HMRC When making a sale to which the reverse charge procedure applies, you must show all the information normally required to be shown on a VAT invoice and must also include a reference forexinfo the invoice to make it clear that the reverse charge applies and that your customer is required to account for the VAT. However, your customer must be able to identify the reverse charge goods or services, and a legend such as the following may be helpful: What if I receive a reverse charge supply? If you take no action to correct the situation when the reverse charge should apply you may put yourself in a position where: What checks should I carry out on my customer? For the purposes of this paragraph: Large businesses may contact their Customer Relationship Manager for advice is this a new customer or a well-established business known to you? In general there is no need for you to carry out special verification of the VAT registration numbers of existing customers with whom you have an established trading relationship is there any indication in the pattern of orders that your customer is attempting to disaggregate see paragraph 9. If so, establish the reasons are credible There is further advice in Notice relating to the integrity of a supplier and this applies equally to that of the customer. Specific accounting issues The customer adjusts both their output tax and input tax accounts under Regulation 38 of the VAT Regulations if: Suggested forms of words for credit notes where the reverse charge did apply are: If using credit charge the following would also be acceptable: Applications for such exclusion should be made to: Help us improve GOV. Services and information Benefits Births, deaths, marriages and care Business and self-employed Childcare and parenting Citizenship and living in the UK Crime, justice and the law Disabled people Driving and transport Education and learning Employing people Environment and countryside Housing and local services Money and tax Passports, travel and living abroad Visas and immigration Working, jobs and pensions. Departments and policy How government works Departments Worldwide Policies Publications Announcements. Support links Help Cookies Contact Terms and conditions Rhestr o Wasanaethau Cymraeg Built by the Government Digital Service Open Government Licence All content is available under the Open Government Licence v3.
And Vasishtha spake the mantra, holiest priest in all the land.
Here holy thoughts a light have shed From many a radiant face, And prayers of humble virtue made The perfume of the place.