VAT Reverse Charge Obligation For Cross-border Electronic Communication Services

On 11 January 2016, the UK government published a new HMRC policy paper in response to the European Commission's consultation on modernising VAT for cross-border e-commerce. This covered the need to simplify VAT payments on cross-border e-commerce transactions in the EU so that there is a reverse charge obligation; where the customer is liable to account for the VAT rather than the supplier. This is an anti-fraud measure, designed to remove the opportunity for fraudsters to charge VAT and then disappear before paying HMRC. It will not apply to non-wholesale supplies or those businesses not registered to pay VAT; it will only apply to those suppliers of certain electronic communication services of routing telephone calls and associated data over landlines, mobile networks and the internet. This measure will be introduced from 1 February 2016.