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UK confirms anti-fraud reverse charge on wholesale power and gas July 2014

  • VAT
  • 06 June 2014 | Richard Asquith

UK confirms anti-fraud reverse charge on wholesale power and gas July 2014

Following the announcement in the last UK budget, HMRC has confirmed that UK (domestic) supplies in the wholesale market of power, electricity and gas will be exempt from UK VAT at 20% from 1 July 2014.

EU combats VAT fraud

The measure is being introduced under the European Union’s Rapid Response Mechanism for VAT fraud. This enables member states to apply to the EC for the right to introduce the VAT reverse charge on goods or services it suspects are vulnerable to VAT fraud. In particular, missing trader fraud whereby criminal / organised gangs claim to sell goods as intra-community supplies (so zero VAT) but actually sell the goods domestically and then charge and pocket the VAT.

There have been a number of fraud reports in the wholesale energy markets of Europe, especially in Germany. Initially, the UK’s HMRC reported that it did not believe this had spread to the UK. However, following questioning in the market, it chose to err on the side of caution and apply for the reverse charge to be introduced.

Under the Rapid Response Mechanism, the UK may apply the reverse charge for 12 months.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.