The government is introducing changes that affect how VAT is charged on roamed usage incurred outside of the EU. HMRC have published their guidance on the changes on their website. These changes affect roamed usage from 1st November 2017 onwards.
As a telecoms reseller, you need to ensure that your billing system is able to cope with these changes in order to remain compliant with the VAT legislation.
What are the old rules (pre 1st November 2017)?
- Usage (calls, data, text messages, etc) by a customer while roaming outside of the EU is not subject to UK VAT (HMRC calls this the 'use and enjoyment' rules).
- Usage by a customer while roaming within the EU is subject to UK VAT at 20%
- Consumers who use their mobile phone outside of the EU should now be charged UK VAT on any roaming charges incurred.
- Business customers should continue to not be charged VAT on roamed usage incurred while roaming outside of the EU.
Summary of the differences
|Usage||Before 01/11/2017||After (01/11/2017)
|In the UK||UK VAT Charged||UK VAT Charged||UK VAT Charged|
|Roamed in EU||UK VAT Charged||UK VAT Charged||UK VAT Charged|
|Roamed outside EU||No VAT||No VAT||UK VAT Charged|
How should I prepare?
Talk to your billing supplier to make sure they are aware of the rules and have plans in place to handle the changes.
If you handle your own billing, you may need to reconfigure the software you use or make changes to it.
You will also need to make sure all of your customers are correctly marked as businesses or consumers to ensure that they get the correct rules applied to them going forward.
All of my customers are businesses, do I need to do anything?
Yes, you need to do 3 things:
Make sure that you are not currently applying VAT charges on roamed usage from outside the EU to your business customers (some billing systems may already be misconfigured).
Ensure you really don't have any consumer accounts (staff accounts count as consumers, and need the new rules applying to them).
Make Sure your billing system will continue to not charge VAT to your business customers after 1st November 2017 (some billing systems might require you to mark customers as business in order to get this behaviour).
Need more information
We can help, get in touch and we can help you manage this transition.