VAT – Reverse Charge on Supplies of Scrap Metal - New Rules from 1 May 2011

The new rules apply to:

• taxable persons carrying on a business in the State, which consists of, or includes, dealing in scrap metal and who receive supplies of scrap metal from other taxable persons who carry on business in the State, and
• taxable persons carrying on a business in the State who supply scrap metal to scrap metal dealers in the State.

From 1 May 2011, a supplier of scrap metal should not charge VAT to a scrap metal dealer. Instead, the recipient of the scrap metal should calculate the VAT on the amount charged by the supplier and account for the VAT directly to the Revenue Commissioners through his/her VAT return. The recipient will be entitled to claim a simultaneous input credit in respect of that VAT, subject to entitlement under normal deductibility rules.

Letters will issue to those involved in the scrap metal industry advising of the rules.

See Scrap Metal for full details including:

• Information Leaflet – Scrap Metal
• Frequently Asked Questions
• Sample letter to scrap metal dealer

It is essential that your clients are aware of the need to begin to prepare for the change at this stage, to ensure a smooth transition to the new system from 1 May 2011.