VAT – Reverse Charge
A recent judgement by the European Court of Justice (ECJ) will have implications for many UK businesses. The judgement in this case (involving Sweden) makes it clear that businesses are required to account for reverse charge VAT on imported consultancy and related services even where the services are used for non-business purposes.
This is in direct contrast to the current UK position where the reverse charge procedure only applies to services received for business purposes and in essence means that the UK has incorrectly implemented European Legislation into UK law.
This case will be of interest to any businesses who supply consultancy services to non-UK customers. A response from HMRC to this judgement is awaited however this decision is likely to result in amendments to UK reverse charge and related VAT legislation.