In May, the Treasury responded by confirming that the proposed rules had not been discussed with Member States, and some elements were unexpected. The Treasury has highlighted three key areas which would be affected, and these are EC Sales lists, VAT Returns and the Time of Supply changes. These key areas are summarised below:
VAT Returns
The proposal provides for compulsory monthly VAT returns, with the expectation that electronic submission be the norm. However, it does provide for non-electronic means, and also longer VAT periods of up to one year for businesses under a certain threshold (whose annual intra-EU acquisitions of goods and reverse charge services do not exceed EUR 200,000).
There would also be a requirement for businesses to show the VAT-exclusive total value of their purchases of services subject to the reverse charge, which would be in a separate new box on the return.
EC Sales Lists
The proposal provides for compulsory EC sales lists for the providers of goods and services subject to the reverse charge to businesses in other Member States. These must be submitted on a monthly basis no later than one month after the period end. The proposal allows for annual lists to be submitted by traders who are below a certain threshold, and for certain categories of business to use non-electronic means.
Time of Supply Changes
The existing options would be removed and replaced with a tax point on the completion of service, unless an earlier tax point is created by a payment or invoice. For continuous supplies of services, there would be an annual tax point where there has been no earlier invoice or payment.
Summary
With regards to the new EC Sales lists, the Treasury says the proposed requirements were largely as anticipated. However, the requirement for compulsory monthly VAT returns and the time of supply changes were not expected. Whilst it was establishing why the Commission had included these elements, the Treasury sought the views of businesses and advisers on these elements as well as on the proposal as a whole. Feedback was requested to be sent direct to the Treasury by May 20th, but so far, there has been no subsequent public announcement on what the gist of the comments were.
Andrew Needham
