If your business supplies wholesale telecoms services, beware this new VAT ruling!
There has been a change in the VAT accounting treatment affecting wholesale telecommunication services where the supplier and customer are both in the UK. Wholesale telecommunication services include supplies such as wholesale short messaging service (SMS) and multimedia messaging service (MMS) etc.
With effect from 1 February 2016, the supplier no longer charges UK VAT on those affected services and instead the customer is required to self account for the VAT through their return under the reverse charge mechanism.
Due to the timescale of the implementation of this VAT accounting change, HMRC will take a “light touch” approach up to 31 July 2016 in respect of issuing penalties, giving affected businesses time to apply the changes.