Hello and a very belated Happy New Year
I hope you’re all well and busy and had a good start to the new year. I had no idea that January would be such a busy month and I’m way behind with everything. I’m certainly not complaining because it’s due to a lot of new client work, which is fantastic!
In the meantime, the subject that is on everybody’s list is the new place of supply rules for B2C EU sales of digital services.
MOSS and UK VAT registration
I’ve had a lot of queries from both accountants and business owners about the new VAT scheme for businesses selling digital services to consumers in other EU countries. I realized just how much confusion there is about the scheme among businesses and even I didn’t initially understand the full implications at first. So I thought I’d clarify a few points for those businesses who want to use the MOSS but are not registered for VAT in the UK.
But first, I’d like to emphasize is that the alternative to registering under the MOSS scheme is that you will have to register in every EU country where you have customers. Even though the MOSS scheme will cause a lot of hassle for many UK businesses, it’s still a lot simpler than registering for VAT in each individual country.
Do you have to register for UK VAT in order to use the MOSS scheme?
YES. BUT YOU DON’T HAVE TO PAY UK VAT ON UK SALES IF YOUR UK TURNOVER IS BELOW THE VAT REGISTRATION LIMIT.
So why do you have to register for UK VAT if you don’t have to pay UK VAT?
Well the reason seems to be that you have to sign on through the normal UK VAT online service to access the MOSS system. I don’t know why HMRC has designed the system this way, but they have.
So if you need to register for MOSS, you can apply to regsiter for UK VAT and MOSS at the same time. When you’re completing the UK VAT application, there is a section which asks for details of your business activities, you’ enter “Digital Services”. There will be an option :”Supplies of Digital Services (below UK VAT threshold) under MOSS arrangements”, so you select this option.
What happens next?
HMRC will issue 2 electronic VAT returns every calendar quarter:
Your UK VAT return. You must submit this each quarter, showing “0” VAT on your UK sales. You must send this in by the end of the following calendar month.
Your MOSS VAT return. You must complete this and submit it to HMRC with payment by 20th of the following month, e.g. 20 April for returns for the months January – March.
When do you have to apply to register?
You have to apply by the 10th of the month after that in which you first made sales which qualify for the MOSS scheme. So if your first sale is in January, you have to apply to register by 10 February.
MORE INFORMATION
I hope this clarifies the position as far as registering for UK VAT is concerned. I realize that there will be a lot of practical problems for MOSS businesses that I haven’t even mentioned above. I will be sending out information and posting information about the most important practical issues on https://vatexchange.co.uk over the next few weeks.
Check out my recent blog http://tinyurl.com/kuhjvhw where I’ve talked about the implications for small and micro businesses who may have to register under the scheme and whether they’re carrying on a business activity for VAT purposes.
Otherwise, you can find more detail on HMRC’s website at http://tinyurl.com/kkp7l9x
I am designing a tool to help MOSS registered businesses calculate their VAT liability in each EU country and this will be available soon to download.
Please email me marie@vatexchange.co.uk if you have any particular queries about the scheme and I’ll do my best to address these issues in my regular postings.
VAT on management services and intercompany charges
I’ve had a lot of queries about my new book about VAT on intercompany services and payments. The book is almost ready and will be published very soon. I know that I keep promising that it will be ready, but sometimes with all the will in the world, there just aren’t enough hours in the day and my clients have to come first. But I’m looking forward to having the time to finish this project so that I can confirm the publication date very soon.
In the meantime, I hope you’re having a very busy and productive month!
Kind regards
Marie