On 13 June 2019, HMRC issued Revenue and Customs Brief 4 (2019) stating that renewable energy certificates are to become subject to the domestic reverse charge (“DRC”).
The effective date for the change will be – 14 June 2019.
As the name suggests the DRC is the VAT inverse of a normal transaction. Under the DRC the supplier charges no VAT. The output tax is accounted for by the recipient (the reverse of what’s usually done) and, in the same VAT period, it also reclaims this output tax (or the proportion it is entitled to) as input tax.
To add to the issue renewable energy certificates are commonly called Guarantees of Origin (GoOs) and are also known as: Renewable Energy Certificates (RECS); Renewable Obligation Certificates (ROCS); Renewable Energy Guarantee of Origin (REGO); and International Renewable Energy Certificates (I-RECS) and HMRC admits other terms are also used.
Still, HMRC have promised a “light touch” with regards to errors made in the first 6 months of the DRC regime.
If you have any questions about how this may apply to your business please contact Ian Marrow, VAT Director, on 01245 254219 or firstname.lastname@example.org