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 At the same time the zero rate of VAT will be withdrawn.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.
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Unincorporated businesses under the VAT threshold given an extra year to prepare before MTD becomes mandatory