HMRC have amended the UK VAT Act so that from 1 February 2016, suppliers of wholesale telecommunication services in the UK will no longer need to charge VAT.
Instead, the customer will account for the VAT by including a reverse charge on its VAT return.
The change will affect services which include the routing of telephone calls and data over landlines, mobile networks or the internet. This will include the provision of text and images. The reason for this change is to prevent Missing Trader Intra-Community (MTIC) fraud taking place. This occurs where the customer is liable to account for the VAT, which he does, but then disappears before paying it over to the tax authority. Insisting that the customer accounts for the VAT instead helps to reduce the instances of this fraud.