Following a successful first discussion with HMRC and HM Treasury last week, Enterprise Nation and a representative from the VAT MOSS group re-visited government officials for an update and to provide clarity on the position ahead of VAT MOSS coming into effect on 1st January.

This morning the group met Mike Cunningham (HM Treasury) and Andrew Webb (HMRC), who are leading the work on VAT MOSS and communications with small business. Over the past week, Mike, Andrew and colleagues have worked tirelessly to improve the guidance and support for small business – responding directly to the call from the VAT MOSS campaign.

What we can provide clarity on today is as follows:

  • Guidance on what small businesses should do to register for VAT MOSS will be published by the end of this week. This will be published on the HMRC pages of gov.uk;
  • There will be additional guidance on what defines a digital service;
  • Guidance will clarify how a business can register voluntarily for VAT, and then for VAT MOSS, without having to charge VAT on its UK sales (i.e. the new arrangements do not threaten the UK's current high VAT registration threshold);
  • Registering voluntarily for VAT will only involve filing a quarterly 'nil' return - it is only the VAT MOSS return that then needs to be completed to reflect cross-border trade in the quarter;
  • A benefit of registering voluntarily for VAT is that a business can choose, if it so wishes, to claim VAT incurred on expenses related to cross border trade (instead of filing a ‘nil’ return), and therefore potentially get some tax back against EU sales on which VAT will be separately payable through VAT MOSS;
  • HMRC has clarified that small businesses carrying out cross border trade will not have to register for MOSS by 31st December. Provided a business notifies HMRC by the 10th day of the month following the month in which they make their first cross-border supply, HMRC will back-date the registration to the date the digital supply was made. For example, if a business makes a sale to the EU on 19th January, it will have until 10th February to notify HMRC and register for VAT MOSS;
  • When it comes to record-keeping, small businesses will only have to collect and keep two pieces of data;

In addition, HMRC will allow businesses who use payment service providers:

a) to ask the customer in which Member State they are resident at the point of sale; and subsequently
b) to review data provided by the payment service provider (normally billing address and Member State where bank or credit card is registered)

Provided the above tallies and the business records this information, that is all the business will need to do. HMRC confirmed that payment providers are working to ensure this happens as seamlessly as possible;

  • A central EU information portal containing all Member States VAT rates and other requirements is available now and will make reporting easier for small business;
  • HMRC will continue to review the VAT MOSS guidance, and to ensure this takes into account the view of small business. Representatives from the VAT MOSS campaigning group will be invited to join a small business panel of representatives feeding into this guidance and any further evaluation about how these arrangements are working in practice.

We hope you will agree this provides absolute clarity on how small businesses can now prepare and be ready for VAT MOSS. HM Treasury has agreed to work with Enterprise Nation to monitor the impact of VAT MOSS and report on this at EU level in 2015, as part of any ongoing and wider debate on VAT and cross-border issues. With sincere thanks to HMRC and HM Treasury for the rapid response to the concerns raised by small business on the information and guidance around this new law coming into effect.

Have your say

Wayne Neale
Wayne Neale

"Worked tirelessly" - apparently 6 years in the planning and they only did anything when small biz shouted. And what has been offered? Basically, bugger all and nothing that would not have been possible by one simple act - a separate VAT register for MOSS, that would leave the UK threshold alone.

But the more important thing is this supposed 'help' still leaves many thousands, maybe hundreds of thousands of businesses facing the prospect of having to either use a third party and suffer costs or deal with the whole sorry mess, from evidence collection, records retention, overseas audits, etc, etc, sometimes all for a few quid in profit. The campaign had a clear goal - there should be threshold below which people don't need to do anything different, like the distance sales rule. I am sure that HMRC have sympathised, wrung their hands, said that the EU rules can't be changed, they need to gather support; all the old lines. Remember, once this system works, it will soon move to goods etc. The reality is that the UK stuffed this up by not once considering small businesses, until late 2014, and now they are politically unable or unwilling to stand up for small businesses. I can't overestimate how tough this is going to be more very small businesses. I think the campaign and pressure needs to carry on, with the goal of a threshold. Views my own. Grrr

faith
faith

Agreed Wayne. Not good enough.n

faith
faith

Agreed Wayne. Not good enough.n

Virginia Crawford
Virginia Crawford

I totally agree with Wayne. There's nothing new in this, and the real issues of compliance for businesses earning less than the UK VAT threshold - and indeed, less than the tax threshold - have been glossed over. It is apparent that the valiant efforts of the VAT MOSS group to represent this sector have been pushed aside. Such businesses are not equipped to comply with the data collection aspect, and would be functioning at a loss if they incorporate all the admin that compliance requires. This will ruin businesses. This will ruin lives. This will result in more people claiming benefits. And what about the people with disabilities, caring responsibilities, young children etc. who aren't able to take jobs outside of the home but who have been trading peaceably and lawfully within and alongside their personal limitations, to keep their heads above water? Do you really want people to starve? As for the 3rd partly platforms we have heard so much about, that we solopreneurs are supposedly trading through and who will supposedly deal with the EU VAT on our behalf : the majority of them haven't yet released statements concerning their stance (yes, Etsy, I'm looking at YOU. Possibly the biggest 3rd party platform I know of outside of Amazon, and with less than a month to go is still avoiding the issue.). The ones who have are mostly saying 'we aren't dealing with EU VAT'. Some solo/nano preneurs sell via their own websites already (which, without the support of 3rd party platforms appropriate to our various products, we will all be forced to do) and the problem there is whether or not the payment processors are able to handle the compliance. The cost of setting up such a system will very likely be prohibitive to businesses who would normally sell via a 3rd party platform. Then we're back to the issue of data collection and storage. All of this costs money. Money that smaller businesses just don't have. Many don't even have accountants; we are true one-person-bands. Many of us were looking to expand our businesses via the internet and digital products, but are having to put our products on hold, perhaps indefinitely, because of the cost of compliance with EU VAT. I'm not just talking about the short-term here, where this applies to digital products. I'm looking at the future, where it applies to physical good as well. At the moment, for the smallest businesses, that future is pretty damn bleak.

Teresa Walker
Teresa Walker

As a sole trader, to say I'm disappointed in this is an understatement. Right now I feel like throwing in the towel and hiding away from the EU bully boys, who THINK they are only going after those huge corporations making use of a tax loophole, but in reality are crippling millions of individuals who are trying to be self sufficient, earn their own money, be creative, contribute to the economy, and generally improve their lives, often while caring for children, relatives or the sick. Wayne has put it all more eloquently than I can. I'm just gutted.

Carla Watkins
Carla Watkins

I'm massively disappointed by this - it doesn't give us any extra leeway. And I don't actually think it clarifies much - they still don't appear to understand the internet.

Has anyone pointed out to HMRC the ridiculous step backwards that this is? WHY would they make us manually email something when it's better and easier and quicker for both us and our customer to automatically download?! Better customer service and less biz owner intervention = more sales = faster growth = better economy = we'll actually be able to pay tax when it's due. It truly isn't rocket science.

The cynic in me really wants to believe that it's all part of a plot to stop us all being able to create passive income (whether that's to get us out of the 9-5 or to allow us to work in a way that traditional jobs just aren't flexible enough to cover, for health, caring or other reasons).

And several people I know who have been inspired by my business adventures to talk about starting their own have already told me they don't want to know now - the compliance or risk of non-compliance is too daunting for someone who doesn't already have a business to protect and fight for.

Additonally, what if Paypal doesn't give you an address? My subscription box company has two or three customers who have had to email us after the transaction to give us the postal address because paypal doesn't always prompt for it - and we are POSTING stuff to them. One of them we had to contact on Twitter before we could ship her first box as she didn't realise her registered address on Paypal was missing and herPaypal email address wrong/no longer checked. They're not going to give it to us for a planner download, now are they - if we can even contact them?!

Please, please can we have someone who understands how the internet works advise HMRC that really, the changes we need are quite simple – a de minimis threshold under which no VAT at all is necessary, and an exemption from these frankly ridiculous data requirements.

Tina Fallon
Tina Fallon

Well that meeting seems to have been a total absolute waste of everyones time, we are actually no further forward whatsover and still being hampered by requirements we just cannot administer. That has finally made my mind up, EU sales will be blocked from my personal site.

Sarah Paine
Sarah Paine

Nothing new. Nothing really clarified. They still expect micro-businesses who do not have the *ability* to obtain this information to still obtain, verify & store it for 10 years. When most of us use PayPal, who don't supply it, we use standard e-shop software, which isn't compliant. If we could *write* code to take into account everything the HMRC is expecting of us, do you think we'd be working from home making the pennies we do, doing the thing we love? This is going to make a very large group of otherwise lawabiding citizens into criminals because we simply cannot implement all these factors. I don't believe anyone who took part in this meeting has a real clue about how it's going to affect us, otherwise they would not have issued this ridiculous "it's going to be all right" news, which has no solutions in it that we've been asking for.

Anne Huxter
Anne Huxter

It doesn't tell us how we're supposed to store these documents, in paper format or on our pc or is there another method we have to use? When it talks about being able to ask the payment provider, mine is Paypal, for the relevant information by then it's too late, payment has gone through, I don't get it. I charge very small amounts for my items, some as little as £1, the most expensive in my shop is £7.99, I'll spend more money on paper and documenting then I will get back in sales. I'm still at a loss as to what to do!!!

Alexa
Alexa

If Enterprise Nation think this provides "absolute clarity" then I think it's quite painfully obvious that they don't understand exactly how this will be hitting small business and they certainly don't represent the VAT MOSS campaign! Glad I didn't join as a member.

Diane
Diane

I agree with all comments made so far, It really is as simple as already stated ... "the changes we need are quite simple – a de minimis threshold under which no VAT at all is necessary, and an exemption from these frankly ridiculous data requirements. "

Is this really a total lack of understanding of how small businesses operate cost effectively and efficiently in this digital age? Words fail me - I'm tut tutting! Heading back to the stone age with substantial human intervention!

Jacqui Malpass
Jacqui Malpass

As the shape of industry changes and more and more people are forced into self employment (downsizing, redundancy) or choose to do so because of lifestyle (family to care for and support), it would make sense that Government acknowledge the contribution that these people (us) are making by not joining the benefits queue and therefore reducing the overall financial burden.

Given that we the miniscule sole trader are working hard to follow our dreams and probably work longer hours than the average corporate slave you would think that systems could be put in place to support us.

How about if - when you want to catch the big and very clever boys (and girls) Government legislates specifically for them. Rather than a blanket that suffocates the entrepreneur?

In the days of Henry VIII taxes were levied on the poor to fill the Kings fighting coffers. Nothing much has changed really, except instead of tilling the land we till the digital space.

When will the crushing of the ordinary, hardworking person end?

This reminds me of the Y2K fiasco - no one was ready for that were they?

Jackie
Jackie

Neither HMRC nor Vince Cable have the humility to admit this was not communicated to the smallest of micros and sole traders.

They know we exist. They know our sector is exploding. Their own reports verify this: Business Population Estimates 2014, Lord Young Report. They find us with easy when they send out our self-assessment forms and national insurance bills.

We were obviously not worth fighting for. They have bigger fish to fry, clearly. We are the price that is going to be paid to get this legislation in place.

For a country that prides itself on its start-up figures and small business sector, this is a shameful response to a ignorant, flawed and clumsy piece of legislation.

Heather Kingsley-Heath
Heather Kingsley-Heath

I agree with Wayne, no changes that I can see. I am furious that my government would even consider allowing it's citizens to be made responsible for an individual's tax liability in another country... to allow the burden of proof to lie with us, to allow another country to effectively pursue us if we fail to comply with this almost impossible to implement legislation. Impossible for people who work hard on their creative skills and want to share them with simple pdf's as a way of making a very modest income. Could there possibly be an exemption within the term 'Business' can HMRC and the UK government really believe it is acceptable to apply the same rules to kitchen table, garden shed, spare room soletrepreneurs as they do to the massive businesses these laws were intended to control? Shame on you! We save you millions already, so many of these individuals work hard to avoid claiming benefits, find work arounds so they can be carers, find ways to cope with health issues by using their creativity and the simple accessibility of the internet. I am heart sore that my little business and so many others will fold under the weight of this legislation.

Owen Jollands
Owen Jollands

This really doesn't help at all. Without VAT exemption up to a threshold amount as we have currently in operation within the UK and other countries have around the world it is impossible for many micro businesses or sole traders to remain competitive.

This not only stifles the growth of UK and EU businesses but also will render the EU and UK a no go zone for SME's and individuals trading from outside the EU who won't be able to deal with all of the added financial and administrative requirements leading to the EU being digitally isolated from global creatives.

This is nothing short of an utterly incompetent disaster.

Anita Hunt
Anita Hunt

I feel so disheartened, by all of this. What some say is clear cut, I believe is the exact opposite. I am thankful for social media, because without it, I would still not be aware of these huge changes.

As someone with an illness and disability, I am unable to work outside the home in employment, providing digital services automatically through downloads for example, is important for those who heavily rely on delivering their services online. I would dearly love to be in a different position, but can't do anything about it. I have been working for months on setting new plans for 2015, it feels such a loss. I gather changes will soon come in for physical products too... it amazes me that I will have to rely on businesses such as Amazon, which doesn't seem right to me.

By nature I like to always look for the positive and find ways to work within guidelines, but this is so confusing that much of the information available just confuses the situation further. Fear of getting it wrong and dealing with the consequences makes me want give up.

Where is the support for disabled workers? where is the support in general?

This news causes such huge difficulties to micro business / sole traders on a number of levels. I am just stunned by this, and feel that again we are punished for trying to earn a living. I don't have the money to set up procedures to cover what is required, getting legal advice is expensive and I'm afraid of getting the admin wrong. Sad. Disappointed....and is not a very happy Christmas.

David Howe
David Howe

Very poorly thought through. Agree with the comments so far. What is needed is a VAT exemption threshold as for UK VAT. This impacts so many people ... And if it expands to cover more than digital too ... Then even more people and micro businesses will be impacted and have to change their business or close ...

Helen Leathers
Helen Leathers

such a shame, so many people on line who are desperate, giving up on their business dreams because of this legislation. This is forcing one man / lady bands to give a percentage of their profits to big corporates. It's a nightmare, devastating, destructive. I agree with all comments above. And it will be even worse if rolled out to physical products!! AWFUL AWFUL legislation

Emma
Emma

Why are the government so hell bent on penalising small businesses? This measure makes things nigh on impossible for the micro business owner to operate and manage. Small businesses are essential for this country's economy and this government does very little to support us. It's almost tempting to throw in the towel and let the state support me!

Sarah
Sarah

Seems to miss the point in so many ways. what if the info doesn't tally? what about the amount of time it takes to gather and store info on every single sale. Many small businesses have many sales of very small amounts, especially if they're running a subscription service of sorts. Recording all this info for every sub payment every month will be a full time job in itself. We need to be exempt, full stop.

Genine
Genine

This doesn't clarify anything at all really. Even though I didn't even make enough to warrant paying NI this year I will still have to register for UK VAT to be able to register for VATMOSS and then I need to complete quarterly returns just in case I sell something to someone in the EU? Whether or not I do I still have to keep records for 10 years and probably have to register with the Information Commissioners to store that data. I sell a few PDF sewing patterns on Etsy - I'm nowhere near the kind of business this legislation was aimed at. I'm just me sitting at home playing with my sewing machines and computer. Etsy are no help at all as currently they say I'm responsible for taxes. I might as well close my fledgling business right now. There's no way I can afford an accountant to deal with this. It just isn't worth the admin hassle for the few sales I do actually have. So much for trying to do something for yourself rather than claiming benefits.

Maria Furtek
Maria Furtek

I don't know whether to laugh or cry... although marginally better than before it still is going to cause me huge implications in time and cost and having to pay someone to sort out the technical side and also now having to register for VAT number and then with VAT MOss and this is going to cost me more in accounting too. Not to mention the hassle of trying to collect two pieces of information about where the buyer lives - may just be easier to remove the online products that have cost me two years of work and lots of money to set up. Not to mention the feeling of total demoralisation and disheartedness for the plans I had in the future for 2015 and new online products that I have spent 2014 building and now will have to rethink.

Maria Furtek
Maria Furtek

I don't know whether to laugh or cry... although marginally better than before it still is going to cause me huge implications in time and cost and having to pay someone to sort out the technical side and also now having to register for VAT number and then with VAT MOss and this is going to cost me more in accounting too. Not to mention the hassle of trying to collect two pieces of information about where the buyer lives - may just be easier to remove the online products that have cost me two years of work and lots of money to set up. Not to mention the feeling of total demoralisation and disheartedness for the plans I had in the future for 2015 and new online products that I have spent 2014 building and now will have to rethink.

Shan
Shan

Why aren't we allowed a threshold? The standard UK threshold is £81000. Those of us who make less than 10% of that should be allowed a threshold of more than £0.00. Very unfair tax on micro- and nano-businesses. By all means go after Amazon and the like but us? Most of us are trying to stay off benefits. Think how much it would cost the UK if we all 'shut up shop' and joined the dole queue.

Sharon Stiles
Sharon Stiles

I appreciate that HMRC are limited in what they can do as this is EU legislation which they have no control over. This has cleared up some of the questions but there are still many more to answer - which I am sure are being asked already.

Many small business owners/sole traders/nano businesses etc have also worked tirelessly in an attempt to educate HMRC and government in the reality of a business world they had very little understanding of.

This has highlighted how little decision makers know about the reality of business and making money for so many people. I hope those decision makers can use this experience to recognise the need for more real world research in the future.

The businesses affected aren't the ones who put millions into the tax coffers or who make money for shareholders. But they have an important role to play in providing an income for the business owner, supplementing a low wage or part time income and even being the starting place for a business that grows and employs tens or hundreds of people in the future.

With the additional cost, time and complication to implement this new legislation, the need to move from existing platforms because they can't/won't comply or with the increase in cost due to having to use a third party to deal with the VAT there is now a barrier that for some businesses is just too high to climb.

Talis Kimberley-Fairbourn
Talis Kimberley-Fairbourn

I’m glad you consider the meeting ‘successful’. For whom, I wonder? In order for it to be ‘successful’ for those who met you and those of us whom they represent, there would need to be rather more immediate and relevant results, I’m afraid, than this ‘update’ offers. And with just seven working days to go, clarity is still nowhere to be seen.

Mssrs Cunningham and Webb, who are ‘leading the work on VAT MOSS and communications with small businesses – I’m afraid I remain unconvinced that you actually understand the scale of the businesses who will be devastated by VAT MOSS.

Perhaps your communications could have included craft seller forums, magazines, websites and networks; perhaps you could have liaised with folk music organisations, indie game developer networks and the knitting pattern designer community. We know you talked to the big guys, yes. We’re not them.

And were you actually talking to the third party platforms, who, you tell us, will be managing the VAT? Because some of them don’t seem to have been any the wiser either. Some of them are very small, niche platforms, enabling people you can’t apparently see to sell things you probably don’t know exist, for sums you wouldn’t open your eyes for, never mind get out of bed. Those platforms, you see.... some of them have set terms and conditions stating that the producer of the goods / artist / seller is wholly responsible for paying all due taxes. Some of them are working themselves into a frenzy trying to catch up and enable their members and customers to continue trading. And some of them simply aren’t talking to us.

That leaves the owners of microbusinesses like mine – no, let’s adopt the term nano-business, because your micro-businesses apparently include enterprises with up to ten employees and up to a £2m turnover, a far cry from half an employee and a £30k, £10k or even £1k maximum turnover – that leaves me expecting to close my online digital interface at the end of the year and accept the loss to my tiny music business in income and networking capability. The administrative burden is simply too great for kitchen table entrepreneurs like me.

Writers, musicians, game devs, designers, poets, photographers and more – we weren’t making much, but we were creating and selling things that people wanted to buy.

Well, you’ve blown our house down, alright - and thrown us to the wolves. Talis Kimberley-Fairbourn Songwriter and folk singer, and Green Party prospective Parliamentary Candidate

Julie
Julie

Over the last 9 years I've built up a tiny business selling knitting patterns. It has blossomed into the sole income for my family and has meant that I have been able to start paying income tax and stop claiming carers allowance and tax credits for the first time in those 9 years (I am carer for my disabled son). This legislation with it's attendant horrors of data collection, compliance in terms of data storage and sheer terrifying complexity will make it extremely hard for me to continue to grow my business. I feel utterly let down, abandoned, ignored and treated as utterly irrelevant by the powers that be and I'm clearly not alone in feeling that.

Lucy
Lucy

This response from HMRC just makes me sad. They clearly don't understand the nature of business in the sector they are dealing with. I have been running a small craft business using the American site, Etsy, for the last 18 months. Recently, I decided that it would be a good addition to my offering to provide digital patterns of my designs. This would allow me to reach a new group of customers who would not want to buy my physical product, but make it themselves. I have created this product and added it to my Etsy shop and had a couple of sales. The product sells for £2.50. Etsy have not yet communicated to their sellers how they are going to enable them to collect the two pieces of data necessary to comply with this legislation. Another site, Craftsy (also American) where I can sell my patterns only allows payment through Paypal, who do not provide the necessary data. This legislation is effectively cutting off my access to the two biggest marketplaces for my product, the place where I have established my business, and the places where there is greatest footfall for this type of product on the internet. The European Union, HMRC and British government clearly do not understand the ways of modern business. In addition to my craft business, I have a plan for a new business, the main stream of revenue would come from digitial products. I cannot see a way to make this business work without the digital component. I would like to continue to work through the internet so that I can continue to be a presence at home for my two young children. This way of working is a way for me to combine my desire to work and give back, alongside my desire to fulfill my caring responsibilities to the children I decided to bring into the world, to the best of my abilities. This legislation, and the stilted, conservative interpretation of it given here is regressive. It risks placing Europe in a digital black hole while the rest of the world carries on trading in information without us. Both the internet and the European Union were intended to break down borders, in commerce and between people. All this legislation is doing is erecting new borders and forcing vulnerable people out of the livelihoods that best suit their circumstances and talent. This is a very sad day for the whole continent.

Rosie Slosek
Rosie Slosek

No news. Looks like HMRC wants to lose millions in revenue. So do the EU. International fraud jump here we come. I was at the meeting with the government and HMRC last week and this is not further forward. http://onemanbandaccounting.co.uk/eu-vat-changes-2015

Mike Kaufman
Mike Kaufman

I agree with pretty much all of the preceding comments. This absolutely needs a minimum threshold, anything else is harmful to economy, society and many indivduals (which should have been obvious to all from the start). But then VAT rates and rules across EU should have been simplified and "harmonized" first, instead of trying to make people deal with 28 different sets of increasingly complex rules. More generally, automated digital downloads should have been the exception to this rather than the first hit (given impossibility of proving location when dealing by web or email, data protection impact, complexity when doing this though an online third-party payment processor etc etc). Could they have got it more wrong?

Where does the campaign go now? There's not really much HMRC can do, it needs the politicians. How do we get this even noticed at high enough level? Is anyone relevant even aware of this economic/political issue (beyond Vince Cable's inadequate response so far)? Any way we can push this issue into any "UK-EU renegotiation"?

Susan Briscoe
Susan Briscoe

The very nature of this new legislation, which I would also have been unaware of without social media, seems to fly in the face of the idea that the EU is about improving trade between member countries. As a sole trader, if I had to comply with the new legislation, it would prove so onerous that I would very quickly have no time at all to develop and make new designs - a sample quilt for the cover photo of a quilt pattern can easily take up to 200 hours to make. I had hoped to start publishing e books and offering my print-on-demand paper patterns as digital downloads, but the new legislation has completely discouraged me. If in future I do branch out into digital formats, I will have to sell via a third party like Amazon, handing over a large chunk of the income I had hoped to receive to them. As I also teach quilt workshops, I cannot take the risk of becoming VAT registered as I could have to charge VAT to my students, which would make the classes unaffordable for a (mainly) retired demographic. At present, I know that certain aspects of tutoring and teaching are VAT exempt, but what if that were to change as suddenly as this? Small, sole trader businesses that are currently below the VAT threshold should NOT have to become involved in VAT for digital downloads. This new legislation will cause many small businesses to cease trading and will force others to sell via exactly the kind of online marketplaces whose tax avoidance strategies seem to have been the catalyst for the new regulations in the first place!

Lotte Lane
Lotte Lane

Ughh. I can't decide what is worse - no-one listening to us, or people *saying*they're listening to us but still apparently not hearing what we're saying. I set up an online business so I could earn a bit of money while staying at home with my daughter. I don't earn enough to pay income tax, and certainly not enough to hire an accountant (and data protection guru and systems expert) to help me with the overwhelming requirements of this new legislation. I suffer from mental health problems which makes working in a 'regular' job hugely difficult for me. I feel defeated, deflated and despondent and - despite this 'helpful guidance' - have no idea what to do next. This whoel #VATMOSS shebang is actually making me ill, I wonder whether I'm better off quitting business altogether and claiming benefits instead...

Jen Gale
Jen Gale

I totally agree with all that's been said, but wanted to add my voice, in the hope that collectively we will be heard. I have laid out a large (to me) sum of money for a new website and have an e-book ready to launch in January, and am now unsure how to go about doing this, or if it us actually worth doing. Like thousands of others, I am a stay at home mum, and purposefully designed a business that I could run from home, and that would allow the flexibility of school runs/school holidays/children off sick etc. it just seems so very sad, and so very ironic, that a law designed to ensure that the likes of Amazon pay their fare share of taxes, should drive solopreneurs and jumper euros out if business, or drive more revenue towards big platforms like Amazon. It's a crazy crazy world, and I am disheartened and confused.

Caroline Callaghan
Caroline Callaghan

I was planning to expand my face-to-face tutoring business in 2015, writing ebooks and creating video tutorials for sale online. But then I found out about these new VAT regulations a couple of weeks ago via social media. I now have the choice between (1) selling via my website and attempting to comply with a huge administrative burden (collecting and keeping customers’ personal details – if that’s even possible? – and completing quarterly VAT returns), or (2) selling via third party marketplaces – who will take a large chunk of my profits. Sadly, I’ve had to choose the third party marketplaces. These new regulations seem designed to kill innovation and enterprise before it’s even started, and simply send more customers to the large multi-national corporations. That doesn’t seem like a good move to me.

Clare Josa, EU VAT Action Team
Clare Josa, EU VAT Action Team

One of our members was present at the debrief meeting this morning. It is hugely disappointing that the updates we were given at the excellent meeting with HMRC, HM Treasury and David Gauke on 4th December were simply repeated today - and presented as being exciting new news. This situation is no longer urgent. It is now an emergency. We have launched an EU-wide petition and have plenty of other suggestions for how you can make your voice heard - and make a difference: http://euvataction.org/updates/ No one will need to close the doors of their business on 1st January if enough of us take massive, inspired action. Thank you for every action you take. Clare x

Wayne Neale
Wayne Neale

OK, pretty clear that everyone thinks that the proposed solution and HMRC trying to dress this up as a help just stinks. There is a new petition Izzy has started, please get behind it and start emailing etc the MP's, PM etc, anyone really to make a big fuss and demand the UK looks after IT'S citizens and OUR interests.

The UK could have insisted in 2008 that they would not sign (needed all 28 MS) unless there was a help built in for small biz. Instead they sold the UK's small traders down the river. Appalling.

I've also told Enterprise nation this debacle isn't great for them either potentially. Views remain my own.

Julia
Julia

I would like clarification on whether we can choose which countries we do or don't sell to please. I am a Sole Trader with a tiny business run from my own website, with sales via a third party gateway. My turnover is miniscule, below UK tax and NI thresholds, and I am not VAT registered. In 4 years of my business, I have made 5 sales to other EU countries, none of which was for a large amount (indeed the postal charge was higher than the value of goods purchased in most cases!) or subject to VAT. It would simply not be worth the hassle of continuing to offer goods for sale if I would have to go through all this rigmarole based on the offchance that someone in the EU decides they might like to buy something from me. I already choose not to sell to some countries around the world (for various reasons, such as a lack of trackable postal service, war etc). So if I am compelled to offer sales to all nations by EU regulations, I will simply have to cease trading next year. I do not have the resources, time or money to administer such regulations.

Helen Free
Helen Free

I have a website selling crochet patterns. This is my only source of income and I was aiming to become totally self sufficient within the next two years. I have been working with foreign translators to translate my patterns to German and Swedish. I was planning on adding Spanish, Dutch and French but, if I can not sell the patterns it is a waste of time. This EU VAT and the ridiculous rules that go with it mean I can not sell as I have been. It would be a waste of time becoming VAT MOSS registered as I can not comply with the data collection. A third party platform would take a large percentage of my profit. My only option is to go back in time and hope that the EU customers are understanding enough to wait for an emailed pattern rather than an instant download. Way to go EU, you have managed to stifle independent enterprise in one fell swoop. You have managed to close down innovation. And you are rewarding the very people you seek to punish by driving thousands of small business' into their arms.

Karen Platt
Karen Platt

I am a sole trader running a garden ebook business from my kitchen table. I do send them out as pdf's attached to a personal email, which is acceptable and outside the EU rules at present. However, this is my sole income and I am trying hard to increase sales. Ebooks are attractive to those overseas because it avoids the costs of postage. If my business were to grow, I would soon be affected because no-one wants to manually send dozens of ebooks an hour. Furthermore, having only just found out about this last month, because no-one informed me even though I am registered as a sole trader, I see there are apparently plans to roll this law out for all products. So I have only a temporary stop-gap solution. I earn way below the UK tax threshold, let alone the normal VAT threshold. It is ridiculous to involve so many tiny entrepreneurs trying to stay off government benefits by making a living selling digital products from home. We need a threshold agreed within the EU to safeguard tiny businesses and sole traders. There is a vast difference between this kind of business and a micro business as described by the EU. What about all the people who earn under 10,000 a year?

Emma Jones
Emma Jones

Thanks for your comments and questions. We are collating these now to get responses to you. What you will have seen from the above post is VAT MOSS is definitely coming into being; it's now a case of doing all we can as small businesses to be prepared. I'm going to speak to payment providers to ask how they will be able to help on the data point and will ask after whether data should be stored for 10 years ie impact on data privacy. Emma

Wayne Neale
Wayne Neale

I am not quite ready to give up if some are. Let's get behind the new petition and website as Clare mentioned.

Richard Oppenheimer
Richard Oppenheimer

I'm wondering how people who sell via PayPal buttons can possibly comply with this. You have to declare a selling price on your website and PayPal just charge that amount, yet the selling price would be different according to which MSC the customer is in and you have no way of knowing that until after the PayPal process has happened.

As for the pieces of evidence that they say you must collect, I don't see any way of collecting even one of them in most cases, let alone two. Also most of them do not give a reliable indicator of the customer's location even if you could gather them.

We regularly buy software and services from USA vendors and I have yet to find one who is VAT registered even under the current regulations - I can't see them registering under the new regulations either, nor can I see that anyone can do anything about it.

Quite clearly whoever dreamed up these regulations had no idea how e-commerce actually works or what they were getting into. As for it being publicised a long time ago I have yet to meet a small business accountant who is clued up about this or a small business accounting s/w package that has the necessary features built into it.

Fabio Virgi
Fabio Virgi

In case it helps anybody, our company Paddle.com provides a checkout so that you can sell digital products directly to customers, but unlike PayPal we handle VAT on behalf of vendors. (This is particularly useful for people selling through PayPal at the moment, as Richard mentioned in an earlier comment.)

Paddle collects data about the customer's location, applies the correct rate of VAT and deals with VAT MOSS too -- all for just 5% + $0.50 per sale. This means you won't have to deal with *any* of the admin work involved with VAT MOSS and can continue selling into the EU going into the new year.

We've also outlined a few other options of how you can deal with the changes on our blog: http://blog.paddle.com/how-to-deal-with-new-eu-vat-regulations/

If anybody would like to have a chat, please drop me a line: fabio[at]paddle.com

Ashley
Ashley

The only "absolute clarity" derived from this so called update is that HMRC and the EU want thousands of sellers including myself to cease trading on the 31st of December. This is my only source of income and I've spent the last 3 years developing a new product entirely at my own expense.

Many more people will now vote for anti EU parties because this legislation will destroy our businesses.

Kevin Andrews
Kevin Andrews

I run a nano / micro website and server hosting company which is essentially a "bedroom startup". The new EU VAT MESS/MOSS rules will open me up to a load more admin work, 28 countries worth of legislation/fines and rules. Plus keeping personally identifying information on my customers for 10+ years ... I'm sure customers will love to know that! On the 1st of Jan I will be ceasing business like most other micro/nano website and server hosting companies in the EU.

Wayne Neale
Wayne Neale

People have to realise that this is just the start. Goods are next. HUGE issue - Imagine, potentially every eBay and Amazon Marketplace seller could have to comply if a member state interprets their sales as 'business' rather than a private sale, as the UK would in many cases (though lots do sell on ebay). Ebay and Amazon are not going to pay the VAT as they are an agent. Even if they do, you will be paying it dear seller out of your proceeds!

This is why a minimum threshold is the ONLY solution and we must press our politicians to sort out what has clearly been a mistake, pursued by political idealists whose starting and ending thought is that everyone must pay tax, that's fair, that's a level playing field. Kind of a socialist fascist combo. Dangerous.

Come on, we are British, backs to the wall stuff is what we are legend for!!

Paul Emmerson
Paul Emmerson

Spoke to 'Kate' at HMRC on phone today. They say that every single transaction will have to be recorded on the VAT MOSS along with country of origin. This is to ensure proper rebates to the various EU countries. I have an eLearning website, currently free. My business model is to move to freemium, with subscriptions. So every single sub from an EU subscriber will have to be manually entered. Massive admin burden for me working alone in my attic. Goodbye digital UK start ups. Goodbye EU ditto. And today's startups are tomorrow's companies. Long sclerosis awaits us as we lose out to US and Asian players. Would leaving EU help? Presumably anyone from outside EU, eg Americans, have to follow same rules.

Wayne Neale
Wayne Neale

Paul, I have asked Andrew Webb to clarify. Even if data can be obtained from payment provider, a small biz needs to collate this data and then transfer to a form. I thought, for each country, one needed to record the total sales to that country in a period and the VAT

Paul Emmerson
Paul Emmerson

Good luck Wayne. Detailed guidance on HMRC website dated 10 December. They are making it up as they go along. With 2 weeks left to go. Please think, dear reader, all sorts of digital products from small companies in Rest of World will be unavailable to you from Jan 1st, if they have not registered for VATMOSS in their own country. 99% of global small biz are completely unaware and will be breaking EU law in 2 weeks. Who will enforce this? At what expense? For how much gain?

Biglouis
Biglouis

I suspect that many of the people posting on this thread who run micro businesses will simply go on trading and keep their heads down, hoping that common sense will prevail in Brussels and a realistic lower limit is put in place. My feeling is this legislation is unenforcable so far as micro businesses are concerned.

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