HMRC have highlighted a forthcoming new requirement that businesses provide EC sales lists for certain taxable supplies of services.
The change affects all UK firms 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.
Alterations to the EC VAT system were agreed by EU finance ministers in December last year. They aim to modernise and simplify 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 begin to take place from 1 January 2010, and the Revenue will soon consult on the UK's implemention of the legislation.
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 the changes.
EC sales lists are currently only required for B2B intra-EC supplies of goods. From 1 January 2010, however, 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 exempt from VAT according to the rules in the member state in which the supply takes place.
- B2B supplies where the recipient is not VAT registered.
- B2C supplies.
HMRC hope to ensure that UK businesses are fully aware of the new requirement, so that they can begin to consider the arrangements or systems that 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 the Revenue anticipates using the same form that is employed for reporting goods (VAT 101), and requiring the following data
- Country code.
- VAT registration number.
- Total value of supplies in sterling.
- An indicator to identify services.
Under the VAT package legislation (which was adopted in February), businesses will have to submit EC sales lists for taxable supplies of services subject to the reverse charge on a quarterly basis.
Member states are currently discussing an EC anti-fraud proposal that includes a provision that from 1 January 2010 all EC sales lists should be submitted on a monthly basis.
HMRC have received a number of comments from UK businesses objecting to the introduction of a monthly requirement in respect of supplies of services, and the department is feeding the grievances into the European discussions.
Queries on the VAT package should be made by email.
