Finance Bill Tracking Service 2009 | Budget 2009


Who is likely to be affected?

1. Businesses that supply goods and/or services to business customers in other EU countries where the place of supply of those services is the customer's country and the customer is therefore required to account for VAT under the reverse charge procedure.

General description of the measure

2. This measure introduces a requirement for UK businesses that supply services where the place of supply is the customer's country to complete EC Sales Lists (ESLs) for each calendar quarter. It will relate only to services on which the customer is required to account for a reverse charge in their country. The ESL should include the following information:

•    the VAT registration number of the businesses to which the services were supplied; and

•    the total value (excluding VAT) of those supplies to each of these businesses.

3. Further secondary legislation will be introduced later in 2009 to enable HM Revenue & Customs (HMRC) to meet a new obligation to exchange information with other EU Member States more quickly to counter fraud. This will:

•    reduce the time available to business to submit ESLs from the current six weeks to 14 days for paper and 21 days for electronic submission;

•    reduce the length of time available for HMRC to collect, process and exchange ESL data with the tax administrations in other Member States to one month in total; and

•    require monthly ESLs for goods where the value exceeds £70,000 in a quarter.

4. The measure forms part of a package of changes to simplify and modernise the VAT system for cross-border trading and to counter fraud that will come into effect from 1 January 2010 across the EU. This package includes:

•    new place of supply rules for services (BN74);

•    new time of supply for cross-border services (BN75); and

•    a new electronic refund procedure for VAT incurred in other EU Member States (BN77).

Operative date

5. The changes will have effect on and after 1 January 2010.

Current law and proposed revisions

6. There is currently no legal provision for the requirement for UK businesses to submit ESLs for the supply of taxable services in another EU Member State.

7. Paragraph 2(3) of Schedule 11 to the VAT Act 1994 will be amended to enable the Commissioners for HM Revenue & Customs to make regulations in respect of services supplied to businesses in other EU countries that are required to account for VAT on those services under the reverse charge mechanism.

8. This will enable the introduction of secondary legislation which will require quarterly submission of ESLs for the taxable supply of services to which the reverse charge applies to have effect on and after 1 January 2010.

9. The main purpose of the extension of ESLs to services is to provide a system of control for intra-EC supplies of services, where the customer is required to account for a reverse charge in their country, similar to that which already exists for goods.

10. The current legislative provisions for the submission of ESLs for goods are in Regulation 22 of the VAT Regulations 1995. Secondary legislation will be introduced later in 2009 amending this.

Further advice

11. An HMRC consultation document VAT Place of Supply of Services: Changes required to implement EC Law was published on 22 December 2008. A response to this consultation has been published today on the HMRC website.

12. Information and guidance on Cross-Border VAT Changes 2010 will be available through a Revenue & Customs Brief from 1 May 2009.

13. If you have any questions about this change, please contact National Advice Service on 0845 010 9000. Information about Budget measures is available on the HM Revenue & Customs website at