Domestic reverse charge ― wholesale trading in electricity and gas

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Value Added Tax

Guidance

This guidance note provides an overview of the scope of the domestic reverse charged applied in respect of wholesale trading in electricity and gas. This note should be read in conjunction with the Domestic reverse charge ― overview and Domestic reverse charge ― accounting requirements guidance notes.

Background

From 1 July 2014, the domestic reverse charge must be used in order to account for VAT due on wholesale supplies of electricity and gas within the UK in order to combat increasing fraud.

Supplies included

The domestic reverse charge applies to all wholesale supplies of gas and electricity made between two UK parties unless the supply falls into one of the exemptions outlined below. This usually means a wholesale supply between two UK parties under trading contracts such as the European Federation of Energy Traders contracts, Grid Trade Master Agreements and National Balancing Point contracts and over-the-counter or spot contracts where:

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