This newly issued Brief confirms the continuation of VAT reverse charge for mobile phones, computer chips and emissions allowances.

The Brief is relevant to businesses buying and /or selling any of the following:

• mobile telephones
• integrated circuit devices, such as microprocessors and central processing units, in a state prior to integration into end user products
• emissions allowances, emissions reduction units and emissions reduction certificates

Further to EU Directive 2013/43/EU which introduced the Reverse Charge Mechanism (RCM), HMRC is confirming that the UK will continue to apply the reverse charge for mobile telephones, computer chips and emissions allowances in their current forms. The RCM allows these measures to run until the end of 2018.

The reverse charge for mobile phones and computer chips was implemented in the UK with effect from 1 June 2007 to remove the opportunity for fraudsters to use these goods to perpetrate missing trader intra-community (MTIC) carousel fraud. As an exception to the normal accounting rules for VAT, the UK secured agreement to derogate from EU law to apply this anti-fraud measure, which originally ran until 30 April 2009. The derogation was then renewed in 2009 and again in 2011.

The EU legal base for the reverse charge for mobile telephones and chips has now been superseded by the RCM. However, no changes are required to UK law which will continue to apply in its current form because the RCM allows Member States the option to introduce a reverse charge without a derogation for other goods and services subject to MTIC fraud.