HMRC gets green light for Reverse Charge

Government finally given go ahead for its strategy to stamp out VAT fraud in the UK

After months of delay HM Revenue and Customs (HMRC) has revealed that its Reverse Charge strategy will come into force in the UK on 1 June.

Reverse Charge, which will levy VAT for chips, components and mobile devices onto the end-user rather than at each stage of the supply chain, has been dogged by delay. It was initially intended to come into force last October (CRN, 24 July). However, it was then delayed until 1 December (CRN, 25 September) and again until January 2007.

According to HMRC, the most commonly used goods in VAT fraud are mobile phones and computer chips, and while it has been waiting for Reverse Charge to be given the go-ahead by Europe, hundreds of UK traders have been subject to its 'Extended Verification' process with regards to VAT repayments, with many still waiting for their money a year after they submitted with VAT returns. This promted the launch of CRN's campaign to highlight the problems suffered by innocent traders earlier this year (CRN, 22 January).

HMRC paymaster general Dawn Primarolo, said: "I am pleased to announce the introduction of the reverse charge, which will further strengthen the government's response to missing trader VAT fraud. We are targeting the measure at the goods most commonly used in the fraud. This is a proportionate step to safeguard taxpayers' money, and means that businesses can trade in these goods without the risk of getting caught up in the fraud.

"The Government remains determined to tackle this fraud and the criminals perpetrating it, and we are committed to working closely with our European and other international partners to combat this serious threat to the EU VAT system, " she said.