On 16 December 2008, the EU Council adopted a Directive 2008/117/EC and a Regulation (37/2009) relating to EC Sales Lists (ESLs) and the time of supply of services subject to the reverse charge.
The implementation date for these new measures is 1 January 2010. This Revenue & Customs Brief gives some information about how these measures will be implemented in the United Kingdom. It should be read in conjunction with Revenue & Customs Brief 53/08.
The main changes relate to the submission of ESLs. In principle, the new Directive provides that these should normally be submitted monthly, but it allows Member States to offer their businesses certain options. The United Kingdom intends to implement these as follows:
The other change to ESLs is that the time, within which both UK businesses and then HM Revenue & Customs (HMRC) must carry out their respective ESL obligations, has been reduced from three months to one. We intend to discuss this issue with business to explore how implementation can balance the needs of business and HMRC. Our current thinking is that businesses that submit paper ESLs would have 14 days from the end of the (last) month to do so. This period would be extended to 21 days for electronic submission of ESLs.
Finally, the Directive makes changes to the time of supply of services rules for services supplied to businesses in another Member State where the customer has to account for VAT under the ‘reverse charge’. The changes are:
These changes will determine not only when the customer has to account for VAT under the reverse charge when the service is received from a supplier in another Member State, but also when a supplier is required to include the transaction on an ESL.
We intend to discuss implementation of the new time of supply rules with businesses, to understand their current accounting practices and their concerns about the changes likely to be needed. Our objective in implementing the rules will be to do so in a way which is as easy as possible for businesses to apply, and minimises additional burdens, while remaining consistent with the provisions of the Directive.
A consultation document covering changes to the place of supply rules for services being phased in from 1 January 2010 and the introduction of a requirement to complete ESLs for reverse charge services was issued on 22 December 2008. The deadline for comments on the draft legislation contained in the consultation paper is 13 February 2009. We will be holding consultation seminars in Central London on 2 and 6 February 2009 and intend to cover the issues arising from the changes set out in this Brief at those events. If you are interested in attending please email.
Issued 26 January 2009