Reverse VAT introduced on carbon trading
Taxman withdraws zero rate and introduces reverse payments of VAT on carbon emission trading
HM Revenue & Customs has unveiled its proposals on reverse VAT charges in relation to carbon trading.
Due to escalating VAT fraud around carbon trading HMRC introduced a zero rate of VAT in July 2009 – while it awaited an EU-wide directive.
The taxman has now unveiled its proposed implementation of a reverse charge on VAT payments on carbon trading. At the same time the zero rate of VAT will be withdrawn.
From 1 November, subject to parliamentary process, it will be the responsiblity of the customer rather than supplier to inform HMRC of VAT payments on carbon emissions, purchased through the EU emissions trading scheme.
The EU-wide directive to provide a reverse option for all member states was adopted in March.
Further reading:
EU introduce reverse VAT for carbon trading
HMRC’s zero-rated carbon VAT could create £50m revenue hole
HMRC uncovers VAT fraud in carbon trading
