Domestic reverse charge for mobile phones and computer chips
Published 18 May 2022
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This publication is available at https://www.gov.uk/government/publications/vat-amendment-to-reverse-charge-for-mobile-phones-and-computer-chips-to-disapply-sales-reporting-requirement/domestic-reverse-charge-for-mobile-phones-and-computer-chips
Who is likely to be affected
Businesses registered or liable to be registered for VAT that sell mobile telephones or integrated circuit devices (mobile phones and computer chips) in the UK under the VAT domestic reverse charge (the reverse charge) procedure.
General description of the measure
The measure will remove the requirement for businesses to report information to HMRC about sales of mobile phones or computer chips in the UK, known as the Reverse Charge Sales List (sales list).
Policy objective
This measure will ease burdens for businesses that are required to report sales information to HMRC by completing a sales list. This will make the reverse charge simpler and quicker to operate for those businesses selling mobile phones or computer chips in the UK and will also bring the reverse charge into line with other reverse charges where a sales list is not required.
Background to the measure
The reverse charge for mobile phones and computer chips was introduced on 1 June 2007 to prevent missing trader VAT supply chain fraud. With its introduction came a requirement to send a sales list to HMRC containing information about each reverse charge sale, value, customer and the relevant period.
The measure is being introduced because HMRC has assessed that it no longer needs the data provided through sales lists because the fraud risk has reduced significantly over the years since the introduction of the reverse charge. It now has other, more effective, ways of monitoring any residual risk through operational and intelligence activity.
Detailed proposal
Operative date
The operative date is 1 July 2022.
Current law
Section 1(2) of the Value Added Tax Act 1994 (VATA) makes the supplier liable for any VAT on supplies of goods or services.
Section 55A of VATA provides that the recipient of a supply must account for the VAT due on supplies of a kind specified in an order made by HM Treasury. The Value Added Tax (Section 55A) (Specified Goods and Services and Excepted Supplies) Order 2010 (S.I. 2010/2239) provides that section 55A applies to mobile telephones and integrated circuit devices.
The Value Added Tax (Amendment) (No.3) Regulations 2007 (S.I. 2007/1418) amended the Value Added Tax Regulations 1995 (S.I. 1995/2518) to add Regulations 23A to 23D. Regulations 23A to 23D obliged a person to notify the Commissioners of the first occasion on which a person makes a supply to which section 55A(6) of VATA applies and for the submission of statements to HMRC containing prescribed particulars about such supplies (the sales list).
Proposed revisions
A statutory instrument (SI) subject to the negative resolution procedure has been made under section 58 of and paragraph 2(1), (3A), (3B) and (11A) of Schedule 11 to VATA. It revokes regulations 23A to 23D of the Value Added Tax Regulations 1995 which required, amongst other obligations, the reporting of relevant supplies in each accounting period by way of a sales list.
The SI was laid on 18 May 2022 and comes into effect on 1 July 2022.
Summary of impacts
Exchequer impact (£million)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses. The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a positive impact on around 200 businesses estimated to be affected in the relevant sectors. It will ease the administrative burdens of producing sales information and reporting it to HMRC. One-off costs for affected businesses may include familiarisation and amending processes to stop compiling and sending a sales list to HMRC, but these are expected to be negligible. Continuing savings are likely to be made from not being required to complete a sales list. The measure is expected to improve business customer experience. This measure is not expected to impact civil society organisations.
Operational impact (£million) (HMRC or other)
This change will have no operational costs for HMRC.
From 17 October 2022, the customer facing sales list service will be turned off.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
HMRC will continue to monitor the extent of any VAT fraud in the sectors covered by the reverse charge to see if ending the reporting requirement has any adverse effect.
Further advice
If you have any questions about this change, contact Paul Grimwood by email: [email protected].
Declaration
The Rt Hon Lucy Frazer QC MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.