eBusiness, EU and VAT - affects those not VAT registered

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eBusiness, EU and VAT - affects those not VAT registered

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Mutton

Joined: 09 May 2009
Posts: 1508

Posted: Wed Dec 10, 14 12:24 pm Post subject: eBusiness, EU and VAT - affects those not VAT registered

Couldn't find anything on this by search.

The rules are changing thanks to EU regs.

See
https://digitalmicrobusinessactiongroup.wordpress.com/about/

It is complicated, but basically you are supposed to charge VAT at the rate of the country where the buyer is located at the time of the purchase. Affects folks selling downloads whether it is knitting patterns or self-pub books or small press.
At present, as of 31st December, if you get it wrong you can be fined - and the fines are massive.

Still time to lobby. Go see the blog above they also have a letter writing page.

vegplot

Joined: 19 Apr 2007
Posts: 21301
Location: Bethesda, Gwynedd

Posted: Wed Dec 10, 14 3:48 pm Post subject:
It's on the HRMC web site... https://www.hmrc.gov.uk/news/supplying-digital.htm and also GOV.UK https://www.gov.uk/vat-on-digital-services-in-the-eu

sally_in_wales
Downsizer Moderator

Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Wed Dec 10, 14 3:55 pm Post subject:

there is a lot of very conflicting 'advice' doing the rounds about this, with it becoming increasingly apparent that the powers that be had no idea just how many teensy tiny businesses, for example, just selling a handful of knitting patterns a year via platforms such as Ravelry, are affected by this.

There are some solutions for many types of business, at least for the initial period when everyone is desperately trying to work out what is going on, but it also looks very much as if not all affected countries are enforcing the new rule equally.

For the knitting/crochet pattern writers on here, if you didn't already know, Ravelry has teamed up with a UK vat registered pattern wrangling service to offer at least one legal and easily used solution to gathering and processing the vat, but I'm not sure what easy options there are if you sell other digital products.

If you use social media, you'll also find a lot of the current debate under #vatmoss and #vatmess

Falstaff

Joined: 27 May 2009
Posts: 1014

Posted: Wed Dec 10, 14 5:12 pm Post subject:
How can anyone Not vote for Nigel Lafarge now ?

sally_in_wales
Downsizer Moderator

Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Wed Dec 10, 14 5:16 pm Post subject:
what is flummoxing a fair few people about this new rule is that even if you are, for example, based in the US, and you sell a digital product to the EU, you will be expected to remit vat at the rate in that country, regardless of your own business point of origin. Its causing many headaches worldwide, not just in the EU

Falstaff

Joined: 27 May 2009
Posts: 1014

Posted: Wed Dec 10, 14 5:26 pm Post subject:

sally_in_wales wrote:

............, based in the US, and you sell a digital product to the EU, you will be expected to remit vat at the rate in that country,.............

One forsees all those happy smiling "Expectant little faces" sadly destined to experience the pangs of disappointment !

What a load of old tosh !

Mutton

Joined: 09 May 2009
Posts: 1508

Posted: Wed Dec 10, 14 9:11 pm Post subject:

The microbusiness action group folks have actually had meetings with HMRC and Treasury, so they are getting their confusion direct from the horses mouth, not via internet whispers.

They are asking that people sign up -

"Please add your name, your website details and a brief description of your business in a comment.

That is all we need at the moment, to help gauge the impact of all this.

As we get a clearer picture of the numbers of businesses and the sorts of traders affected, then relevant mailing lists, article links and other resources can be added to this site."

See https://digitalmicrobusinessactiongroup.wordpress.com/sign-up-here/

RichardW

Joined: 24 Aug 2006
Posts: 8443
Location: Llyn Peninsular North Wales

Posted: Wed Dec 10, 14 9:45 pm Post subject:
Does this affect non VAT registered businesses? Cant see it mentioned anywhere that non reged sellers have to charge it.

vegplot

Joined: 19 Apr 2007
Posts: 21301
Location: Bethesda, Gwynedd

Posted: Wed Dec 10, 14 11:02 pm Post subject:

RichardW wrote:

Does this affect non VAT registered businesses?

Yes. That's why it will have a significant impact for micro businesses selling digital services.

What is particularly worrying is that once you apply to be VAT registered in the EU which you will have to do even if you sell just one digital item worth �5 then you (may) lose UK VAT exemption...

Quote:

It has particular effects for small businesses with turnovers of less than �81,000 per annum, who had previously been exempt from VAT.

In a nutshell, once they register to pay VAT in EU countries, they lose this exemption and will be forced to pay VAT in the UK as well.

sally_in_wales
Downsizer Moderator

Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Thu Dec 11, 14 9:34 am Post subject:
there are also mutterings about this being a lead up to the same policy being extended to non digital products in a couple of years, so even if your current product list makes you think 'ha, it doesn't apply to me', its worth being supportive of those trying to get HMRC to recocgnise just how micro businesses work and how this will affect them, because it may yet come back to bite everyone

sally_in_wales
Downsizer Moderator

Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Thu Dec 11, 14 10:57 am Post subject:
this seems to be the latest briefing note from HMRC and thankfully its fairly easy to understand for a change https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance

vegplot

Joined: 19 Apr 2007
Posts: 21301
Location: Bethesda, Gwynedd

Posted: Thu Dec 11, 14 12:16 pm Post subject:

sally_in_wales wrote:

this seems to be the latest briefing note from HMRC and thankfully its fairly easy to understand for a change https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance

The bit that says "you will not lose your UK VAT registration threshold." is re-assuring.

Mutton

Joined: 09 May 2009
Posts: 1508

Posted: Thu Dec 11, 14 8:53 pm Post subject:

Microbusiness Action Group have posted a link to a survey

https://euvataction.org/take-action-now/complete-the-survey/

Where you can give the impact on your business, or your planned business. Also feedback on when you were informed, how, who by and how baffled you still are. Only takes a couple of minutes.

They are asking people to fill it in as a matter of urgency, and to do it from where ever in the world you are trading from.

Mutton

Joined: 09 May 2009
Posts: 1508

Posted: Sun Dec 14, 14 6:29 pm Post subject:
And there is now also a petition to the EU parliament asking them to suspend the new ruling for microbusinesses and sole traders. https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders/share Needs several thousand more signatures.

sally_in_wales
Downsizer Moderator

Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Sun Dec 21, 14 5:46 am Post subject:
Very interesting update here with clear notes on what to write to your mp about, remember, in a year this might affect all small businesses not just digital ones https://euvataction.org/2014/12/20/update-how-not-to-let-eu-vat-ruin-your-christmas-or-your-business/

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