VAT Reverse Charge
HMRC have renewed the EC derogation that affects businesses involved in the mobile phone and computer chip sectors. A VAT reverse charge procedure had been in effect from 1 June 2007 for these sectors and which was designed to reduce incidences of carousel fraud.
The UK government wished to extend this derogation which was due to expire on 30 April 2009. Permission was formerly granted in May to extend this derogation until April 2011. The extension has retroactive effect from 1 May 2009 which allows the reverse charge procedure for these supplies to continue unbroken.
Any businesses that buy or sell mobile telephones or ‘integrated circuit devices, such as microprocessors and central processing units, in a state prior to integration into end user products’should be made aware of the renewal of this derogation until April 2011.