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Gathering MOSS: non-registered traders

Let us start by getting one thing out of the way: VAT is a mad tax with mad rules. So don’t blame us for what follows. Read it if you supply “e-services” electronically to consumers (i.e. non-businesses).

New rules come in from 1 January 2015 on the VAT treatment of “electronically supplied e-services” supplied to consumers. (They also apply to broadcasting and telecommunications services, but this note is not about those). This inelegant phrase means, broadly, services which are automatically delivered over the internet with little or no human intervention. So essentially the change applies where your customer clicks to download from a website material such as pdf documents, photographs, on-line pre-recorded courses and webinars (but not live ones), software, music, films, games, apps, e-books and so on.

Under the new rules, such supplies will from 1 January 2015 be treated as made in the country in which the consumer belongs. Since in many countries there is no VAT registration threshold, you would normally need to register for VAT in each country in which you have retail customers. However, there is a simplified system known as a “mini one-stop shop” (“MOSS”). This allows you to register with HMRC to account for VAT on any and all supplies of electronically supplied e-services made to consumers in other member states of the EU (albeit that you still have to find out and apply each relevant country’s rate of VAT).

The fly in the ointment has been the fact that you need to have a UK VAT number to enter the MOSS regime. And many suppliers of this sort of e-service are (at least to start with) below the UK VAT registration limit of £80,000. Such traders making supplies to consumers elsewhere in the EU therefore seemed to have a choice. Register in multiple EU countries; become registered for MOSS (which requires you to become VAT-registered in the UK and charge VAT on your UK supplies); or simply stop making supplies to consumers in other EU countries.

HMRC have now (10 December) issued helpful additional guidance. The online VAT registration process has now been tweaked to make it possible to register for VAT solely for the purposes of gaining access to MOSS and without thereby becoming liable to account for VAT on domestic supplies. Some care is needed to ensure that you tick the right boxes when registering; and the scope for reclaiming VAT (only in respect of services accounted for via MOSS, of course) is quite interesting. Nonetheless, it is progress of a kind and we welcome it. See the additional guidance here. And for more on MOSS generally, please get in touch with your usual BKL contact or use our enquiry form.

David Whiscombe

Consultant

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