Budget 2014 – VAT: reverse charge for gas and electricity

Currently, the supplier of wholesale gas and electricity is liable to account for the VAT.

In future, the customer will become liable on a ‘reverse charge’ basis and the wholesaler will cease to be liable.

The new measure will not apply to domestic supplies or supplies to businesses not registered or liable to be registered for VAT.

There will be an informal consultation with the industry to determine the operative date.

This is an anti-fraud measure to remove the opportunity for dishonest suppliers to charge VAT and then ‘go missing’ before paying it to HMRC.