Template:M summ EUA Annex (d)(viii)

VAT on Allowances is handled through a “reverse charge” mechanism, designed as an anti-fraud measure shutting the “carousel fraud” loophole that used to allow naughty people to charge VAT and then disappear before remitting it to tax authorities.

The reverse charge makes the customer — typically a carbon emitter like an energy utility, so not the sort of business that can easily upsticks and vanish — rather than the supplier — in the collective imagination, some twenty-five year old blagger with a motor launch acquired with ill-gotten tax receipts moored in Monaco — liable for the VAT.

This stops the supplier charging VAT from the buyer and then scramming for a weekend bender on his launch, The Cheeky Carousel, with some few of coke and bevy of well-proportioned front-row rugby forwards. [This may be a transcription error. NiGEL, can you check? — Ed].