VARs unready for Reverse Charge
Many channel players do not have systems in place for new Reverse Charge rules
The majority of channel firms are still unprepared for the government’s fraud-busting Reverse Charge scheme after it came into force last week.
Reverse Charge, which officially became law on 1 June, levies the VAT for orders of mobile phones and CPUs over £5,000 onto the buyer, rather than the seller, but requires significant changes to affected dealers’ VAT systems (CRN, 14 May).
Last month a House of Lords committee ruled that VAT fraud levels are ‘out of control’ and that Reverse Charge was just a ‘temporary solution’ which will cause the fraud to ‘mutate into other sectors’. It also branded HM Revenue and Custom’s Extended Verification strategy a ‘significant burden on smaller firms’.
Keith Warburton, chief executive of the Professional Computing Association, agreed the industry is not ready.
“Most of the medium-sized players aren’t aware of Reverse Charge, and those of the larger players who do know of it haven’t really been able to do much about it because the software has not been available.”
However, accounting vendor Access Accounts claimed a first last week by unveiling an accounting upgrade package that ensures affected firms’ VAT systems comply fully with the HMRC strategy.
Pip Trowles, part of the product management team at Access Accounting, told CRN: “We have known about Reverse Charge for quite some time, but there have been several changes to the scope and rules of the legislation. The final version of the software is now available through our reseller network.”
Piers McLeish, marketing director at Access partner Armstrong Consultants, said: “We have four customers, all in the mobile distribution and comms industry that have upgraded their systems so far, but a lot of firms seem to be holding back to see how Reverse Charge pans out.”