Carousel VAT fraud & HMRC (new VAT regulations)
Discussion
If you purchase or sell any of the following you need to be aware of this:
1. mobile telephones
2. computer chips/microprocessors/central processing units
3. electronic storage medium which may be used in, or in connection with, computers, or any device in categories 1 and 4
4. electronic devices used for the storage, processing or recording of electronic data as follows:
a) handheld devices for recording or playing of sound and or images
b) handheld computers
c) handheld communication devices other than mobile telephones
d) positional determination devices for GPS system
e) games consoles with screen, or of a kind used with a television or computer.
From 01/12/2006
To counter missing trader intra-community fraud (Carousel fraud) HMRC are implementing new rules for applying VAT for these goods. They are proposing to use a reverse charge accounting system for these types of goods.
Now I don’t necessarily have a problem with this apart from the fact the timescale for implementation is crazy
. My company gets hit both ways. We purchase and resell some of the goods above plus we write accounting software. Knowing the problems this is going to give us I can predict that a lot of companies won’t have a fully implemented system to handle this until mid 2007. Luckily I think were going to be ok and we will get our customers sorted on time but its going to be a major headache for some.
For those who are realy intrested this is how it is going to work (from HMRC):
How will the reverse charge work?
Under the reverse charge procedure, the purchaser of the goods, rather than the seller, will be liable to account for the VAT on the sale. The supplier will not charge VAT, but will have to specify on the invoice that the reverse charge applies. Provided that the purchaser has correctly accounted for the VAT under the reverse charge procedure, he will retain the right to input tax recovery, subject to the normal rules.
Will it apply to all transactions in these goods?
In order to minimise the impact of VAT-registered customers on retailers, there will be a de minimis limit of £1000, exclusive of VAT, below which the reverse charge will not apply. Normal VAT accounting rules will apply to transactions below this limit. There will be measures to prevent manipulation of this de minimis limit.
Will there be any special requirements to report transactions?
In order to enable HMRC to ensure that the reverse charge mechanism does not lead to any new revenue losses, there will be a requirement for suppliers to submit a reverse charge sales list to HMRC (similar to EC Sales Lists) listing customer and transaction details where the reverse charge has been applied. The exact details of this reporting requirement will be set out in secondary legislation and will be informed by discussions with businesses over the summer period.
1. mobile telephones
2. computer chips/microprocessors/central processing units
3. electronic storage medium which may be used in, or in connection with, computers, or any device in categories 1 and 4
4. electronic devices used for the storage, processing or recording of electronic data as follows:
a) handheld devices for recording or playing of sound and or images
b) handheld computers
c) handheld communication devices other than mobile telephones
d) positional determination devices for GPS system
e) games consoles with screen, or of a kind used with a television or computer.
From 01/12/2006
To counter missing trader intra-community fraud (Carousel fraud) HMRC are implementing new rules for applying VAT for these goods. They are proposing to use a reverse charge accounting system for these types of goods.
Now I don’t necessarily have a problem with this apart from the fact the timescale for implementation is crazy
. My company gets hit both ways. We purchase and resell some of the goods above plus we write accounting software. Knowing the problems this is going to give us I can predict that a lot of companies won’t have a fully implemented system to handle this until mid 2007. Luckily I think were going to be ok and we will get our customers sorted on time but its going to be a major headache for some. For those who are realy intrested this is how it is going to work (from HMRC):
How will the reverse charge work?
Under the reverse charge procedure, the purchaser of the goods, rather than the seller, will be liable to account for the VAT on the sale. The supplier will not charge VAT, but will have to specify on the invoice that the reverse charge applies. Provided that the purchaser has correctly accounted for the VAT under the reverse charge procedure, he will retain the right to input tax recovery, subject to the normal rules.
Will it apply to all transactions in these goods?
In order to minimise the impact of VAT-registered customers on retailers, there will be a de minimis limit of £1000, exclusive of VAT, below which the reverse charge will not apply. Normal VAT accounting rules will apply to transactions below this limit. There will be measures to prevent manipulation of this de minimis limit.
Will there be any special requirements to report transactions?
In order to enable HMRC to ensure that the reverse charge mechanism does not lead to any new revenue losses, there will be a requirement for suppliers to submit a reverse charge sales list to HMRC (similar to EC Sales Lists) listing customer and transaction details where the reverse charge has been applied. The exact details of this reporting requirement will be set out in secondary legislation and will be informed by discussions with businesses over the summer period.
still nanny knows best FFS. The following may provide some comfort:
"We also recognise that it will be appropriate to adopt a ‘light touch’ regime for penalties for non-compliance with reverse charge accounting in cases where there is no revenue loss, or the transactions are not part of a chain of transactions involving VAT fraud."
HMRC Business Brief
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