From 1 February 2016 UK businesses who provide wholesale telecommunication services to other UK businesses will no longer account for VAT on the transaction. Instead, the customer must account for VAT using the reverse-charge procedure.
This will apply to telecommunications services which enable instant speech communication or the transmission of writing, images or sounds, such as wholesale SMS and MMS services, and SMS hubbing. There is no de-minimus rule.
Exclusions include non-wholesale supplies, broadband and other data transmission only services, and supplies for final consumption.
The domestic reverse charge has already been introduced in the UK for mobile phones and computer chips, gas and electricity, and emissions allowances. At the time of writing, VAT notice 735: VAT domestic reverse charge on specified goods and services had yet to be updated for telecommunications services.
For more information see Revenue and Customs Brief 1 (2016).