Budget 2017 – Roaming outside the EU to be charged with VAT

Today’s budget (March ’17) included new provisions to remove the previous VAT rules, that currently mean that roaming calls (voice, data and SMS) originating outside of the EU are not charged with VAT. With effect from Aug ’17, VAT will now apply to all mobile charges regardless of whether calls originate in the EU or Rest of World. The changes are aimed at business to consumer sales, however it is likely that the change may also impact public sector organisations, and business in the financial services sectors, where VAT cannot be automatically reclaimed.

The ruling is expected to generate HMRC £45m in 2017/18 and £65m p.a. thereafter. In reality, however, the use of Wi-Fi and VoIP-based services will continue to break down roaming barriers, and significantly erode international roaming revenues, and so it is difficult to see how this measure will actually consistently deliver these revenues to HMRC.

From HMRC – “VAT: Use and enjoyment provisions for business to consumer mobile phone services – The government will remove the VAT use and enjoyment provisions for business to consumer mobile phone services to individuals. This will resolve the inconsistency where UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU. It will also ensure mobile phone companies cannot use the inconsistency to avoid UK VAT. This will bring UK VAT rules into line with the internationally agreed approach. (25)”

For most organisations with more than 50 mobile users, roaming charges can be materially reduced by over 50% by aligning the right commercial contracts to your usage profile and by implementing sensible usage policies and device management rules. For a free mobile health check and review, to see how your organisation could benefit, contact Utelize on 03300 240 444, or at hello@utelize.co.uk.

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