The new provisions will come in on 1 January 2010, and will affect all UK businesses that make taxable supplies of services to business customers in other EU countries where the customer is required to account for VAT under the ‘reverse charge’ procedure. The new requirement is one of five measures in a package of changes adopted by EU Finance Ministers in February 2008.
The package of changes will be phased in between 1 January 2010 and 1 January 2015, and can be summarised as follows:
• changes to the rules on the place of supply of services for Business-to-Business (B2B) and Business-to-Consumer (B2C) transactions.
• requirement to complete EC Sales Lists for supplies of taxable services to which the reverse charge applies.
• introduction of an optional One Stop Scheme for B2C supplies of telecoms, broadcasting and electronically supplied services.
• introduction of an electronic VAT refund scheme.
• enhanced Administrative Co-operation between Member States to support these changes.
Brief 53/08 relates only to the second item above, and points out that EC Sales Lists will not be required for the following:
• supplies which are exempt from VAT according to the rules in the Member State where the supply takes place.
• B2B supplies where the recipient is not VAT registered.
• B2C supplies.
HMRC say they are making the announcement now to give businesses plenty of time to put arrangements or systems in place to gather the information needed. At present, HMRC anticipate using the existing VAT101 form, which will require the following data:
• country code.
• customer’s VAT Registration Number.
• total value of supplies in sterling.
• an indicator will also be required to identify services.
Under the VAT Package legislation adopted in February 2008, EC Sales Lists would still be due on a quarterly basis. However, Member States are currently discussing an EC anti-fraud proposal for all EC Sales Lists to be submitted on a monthly basis from 1 January 2010.
HMRC have since received comments from a number of UK businesses objecting to a monthly requirement for supplies of services. HMRC say they are feeding those responses into the discussions and will report the outcome of the negotiations as soon as possible.