VAT – new Requirement from 1 January 2010 that Businesses Provide EC Sales Lists for Taxable Supplies of Services to Which the Reverse Charge Applies

This article publicises a new requirement that businesses provide us with EC Sales Lists for certain taxable supplies of services from 1 January 2010. This requirement affects all UK businesses that make taxable supplies of services to business customers in other EU countries where the customer is required to account for VAT under the reverse charge procedure.

Background

A package of changes to the EC VAT system was agreed by EU Finance Ministers in December 2007 and adopted in February 2008. The changes will modernise and simplify the current rules relating to cross-border supplies of services and to the recovery of VAT on purchases made in other EU countries. The changes will take place between 1 January 2010 and 1 January 2015 and we will consult on the UK implementing legislation later this year. The package includes:

• changes to the rules on the place of supply of services for Business-to-Business (B2B) and Business-to-Consumer (B2C) transactions
• a requirement to complete EC Sales Lists for supplies of taxable services to which the reverse charge applies
• the introduction of an optional One Stop Scheme for B2C supplies of telecoms, broadcasting and electronically supplied services
• the introduction of an electronic VAT refund scheme
• enhanced Administrative Co-operation between Member States to support these changes

Action Required Now

This brief is only concerned with the second item above. Currently EC Sales Lists are only required for B2B intra-EC supplies of goods. However, from 1 January 2010 EC Sales lists will also be required for intra-EC taxable supplies of services to which the reverse charge applies. They will not be required for:

• supplies which are exempt from VAT according to the rules in the Member State where the supply takes place
• B2B supplies where the recipient is not VAT registered
• B2C supplies

We wish to ensure that UK businesses are fully aware of this requirement so that they can start considering what arrangements or systems they may need to put in place to gather the information needed to complete EC Sales Lists, particularly if these are, or will need to be, electronic systems that will require change. At the present time we anticipate using the same form that is used for reporting goods (VAT 101) and to require the following data:•

• country code
• customer's VAT Registration Number
• total value of supplies in sterling
• an indicator will also be required to identify services

Under the VAT Package legislation that was adopted in February, from 1 January 2010 businesses will have to submit EC Sales Lists for taxable supplies of services subject to the reverse charge on a quarterly basis. However, Member States are currently discussing a European Commission anti-fraud proposal which includes a provision that from 1 January 2010 all EC Sales Lists should be submitted on a monthly basis. We have received a number of comments from UK businesses objecting to the introduction of a monthly requirement in respect of supplies of services. We are feeding those responses into the European discussions and we will report the outcome of the negotiations as soon as we are able.

We will be discussing the above changes with software developers and will issue further detailed information on this and other aspects of the VAT package as we are able. In the interim, any queries on this Revenue & Customs Brief or the VAT package in general should be made by email.