In its Revenue and Customs Brief 1/2016 HMRC has advised that, in a measure to counter the threat of missing trader intra-community VAT fraud, a reverse charge accounting mechanism is to be introduced on 1 February 2016 for wholesale supplies of telecommunication services in the UK.
This new reverse charge will impact on businesses that buy or sell wholesale telecommunications services in the UK including:
Message hubbing providers
Short messaging service (SMS) and voice aggregators
The short timescale involved leaves affected businesses very little time to update systems and implement processes and controls.
Although HMRC has stated that it will be adopting a ‘light touch’ approach where businesses are making ‘reasonable efforts’ to comply it is important that all affected businesses put in place an implementation plan to evidence the efforts they are making to comply with the new rules. It is in particular important to take appropriate due diligence measures to ensure that suppliers and clients are not involved in a fraudulent supply chain. HMRC’s light touch is more likely to be applied to technical errors that involve no net loss of Revenue. HMRC tends to be unforgiving when it suffers a real revenue loss.
For further information please speak to Dean Carey.