From 1 May 2011, a supplier of scrap metal should not charge VAT to a scrap metal dealer. Instead, the supply will be accounted for on the reverse charge basis. This means that the recipient of the scrap metal should calculate the VAT on the amount charged by the supplier and account for the VAT directly to the Revenue Commissioners through his/her VAT return. The recipient will be entitled to claim a simultaneous input credit in respect of that VAT, subject to entitlement under normal deductibility rules.

The new rules apply to:

• taxable persons carrying on a business in the State, which consists of, or includes, dealing in scrap metal and who receive supplies of scrap metal from other taxable persons who carry on business in the State, and
• taxable persons carrying on a business in the State who supply scrap metal to scrap metal dealers in the State.

Letters will issue from Revenue to those involved in the scrap metal industry advising of the rules.

Further details including an information leaflet, FAQs, and a sample letter to a scrap metal dealer, is available from the Revenue website using the link-http://www.revenue.ie/en/tax/vat/scrap-metal.html