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 VAT and Telecommunications – New Reverse Charge

By Gabelle LLP

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On 11 January 2016, HMRC issued a Policy Paper announcing that from 1 February 2016 the VAT rules governing the supplies of telecommunications services would change.

Certain services will now fall under the domestic reverse charge, so that in qualifying circumstances the supplier will not charge and collect VAT from its customer and the customer will be required to account for the output tax on its own VAT returns under the reverse charge procedure.

Services affected include the wholesale supply of electronic communications services in the UK, which covers the routing of telephone calls and associated data (text, images) over landlines, mobile networks or the internet.  It does not apply to non-wholesale supplies or to businesses not registered or not liable to be registered for VAT.

Due to the imminent nature of this change, businesses and their advisers should familiarise themselves as soon as possible with the changes and consider how to implement the change, both for the immediate future and in the long-term which might ultimately require the modification of IT systems.

Published January 2016