HM Revenue and Customs Brief 36/13
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Issued 9 December 2013
VAT: Reverse charge accounting for businesses trading in
mobile telephones, computer chips and emissions allowances:
continuation of current treatment.
Who needs to read this?
Businesses buying and / or selling any of the following:
- mobile telephones
- integrated circuit devices, such as microprocessors and
central processing units, in a state prior to integration into end user
- emissions allowances, emissions reduction units and
emissions reduction certificates
Further to EU Directive 2013/43/EU introducing the Reverse
Charge Mechanism, HMRC can confirm that the UK will continue to apply
the reverse charge for mobile telephones, computer chips and emissions
allowances in their current forms. The Reverse Charge Mechanism allows
these measures to run until the end of 2018.
The reverse charge for mobile phones and computer chips was
implemented in the UK with effect from 1 June 2007 to remove the
opportunity for fraudsters to use these goods to perpetrate missing
trader intra-community (MTIC) carousel fraud. As an exception to the
normal accounting rules for VAT, the UK secured agreement to derogate
from EU law to apply this anti-fraud measure, which originally ran
until 30 April 2009. The derogation was then renewed in 2009 and again
A zero rate for emissions allowances was introduced on 31 July
2009 as an interim measure to halt rapidly escalating MTIC fraud in
this area, pending agreement on a common EU-wide countermeasure. A
Directive providing an option for all Member States to introduce a
reverse charge was adopted in March 2010 and the UK's reverse charge
for emission allowances was implemented with effect from 1 November
The EU legal base for the reverse charge for mobile telephones
and chips has now been superseded by the Reverse Charge Mechanism. The
Directive also has the effect of extending the period of validity of
the reverse charge for carbon credits from 30 June 2015 to the end of
2018. However, no changes are required to UK law which will continue to
apply in its current form.
The Reverse Charge Mechanism allows Member States the option
to introduce a reverse charge without a derogation for other goods and
services subject to MTIC fraud; these are: gas, electricity, games
consoles, tablet PCs, laptops, industrial crops and raw and
For further information on the reverse charge please see Public
Notice 735: VAT reverse charge on specified goods and services.
About the Author
© Crown Copyright 2013.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2013-12-12 12:21:05 in Tax Articles