Channel doubtful over Reverse Charge launch

Channel players are sceptical that HM Revenue and Customs’ (HMRC) Reverse Charge strategy will come into force this summer.

HMRC last week announced that its Reverse Charge anti-VAT fraud strategy, which levies VAT from IT goods such as chips, components and mobile phones on the end-user rather than at each stage of the supply chain, will become part of UK law on 1 June (CRN Online, 19 March).

Reverse Charge has seen its implementation deadline delayed twice since it was announced last summer, due to objections raised by other European Union (EU) members. The strategy was approved at an EU Agriculture and Fisheries council meeting last week.

Maria Assimakopoulou, representative for the director general of taxation and customs at the EU, said: “Reverse Charge will apply to mobile phones, chips and computer components. It is for a very specific area and applies to the UK only.”

Ed Elliot-Square, sales manager at International Phone Traders, a mobile phone industry web site, said: “Reverse Charge will be a good thing. But our concern is that firms will invest millions in updating their systems in time for 1 June and the implementation date will be delayed again.”

Fred Howarth, chairman of the Federation of Technological Industries, said: “We do welcome Reverse Charge. However, we need certainty that it is going to come into force and we do have serious doubts.”

An HMRC representative told CRN: “The final text will now be translated into all the official languages of the EU and formally adopted in the near future. It will be introduced into UK law through secondary legislation.”

However, the HMRC representative added that VAT repayment claims subject to Extended Verification will also continue.

Green light for Reverse Charge