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HMRC internal manual

VAT Place of Supply (Goods)

Gas and electricity: Reverse charge

UK Law

The reverse charge provisions for natural gas and electricity are set out in section 9A, VAT Act 2004 (see VATPOSG5220).


A feature of the special rules for natural gas and electricity is the of reverse charge mechanism. This is very similar to the arrangements that work in unison with some of the place of supply rules for services. In this case it is intended to reduce the level of VAT registrations for natural gas and electricity suppliers within EU Member States. However, non-established suppliers with customers who are not registered for VAT in a Member State will normally continue to be required to register for VAT in that Member State.

Application of the reverse charge

So far as we in the UK are concerned, the reverse charge potentially applies to

  • supplies made to a UK wholesaler, or
  • where the supply is of natural gas or electricity consumed in the UK.

Consequently, if a supplier is located outside the UK and the customer is registered for VAT here, it is for the UK customer to account for the VAT under the reverse charge mechanism. The reverse charge is mandatory and so applies even if a non-established supplier is VAT registered in the UK for other UK business activities.

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Tax point

Information about the tax point for supplies covered by the natural gas and electricity place of supply arrangements can be found in the manual covering time of supply, VATTOS.

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Applying the UK reduced VAT rate to supplies subject to the reverse charge mechanism

It is for the customer (who is treated as the supplier under the reverse charge mechanism) to determine whether any of the supplies they are receiving are put to qualifying use. See Notice 701/19: Fuel and power.

Where there is mixed use, the recipient will be able to apportion consumption between qualifying, and non-qualifying, use and in calculating the reverse-charge, apply the reduced rate to the qualifying proportion. If the qualifying use exceeds 60 per cent, they will be eligible to account for VAT at the reduced rate on the full amount. Certificates are unnecessary in these circumstances. However, the customer will be required to undertake, and retain, the same apportionment calculations as they would have relied on in providing a supplier with the appropriate certificate.