Energy News – 24/02/2017
What’s been making headlines across the energy world this week? We round up the big stories from the las...Read More
EU reforms slated for 2016 could mean thousands of small UK businesses face a new onslaught of stifling red tape.
Since the start of 2015, UK companies that sell digital services to customers in Europe have been forced to pay VAT according to the laws set by the country in which their buyers live. Even to businesses below the current UK VAT turnover threshold of £82,000 (approximately €115,000) are affected.
But campaigners warn that policymakers in Brussels are planning to extend the new system to cross-border retailers of all types of goods and services as early as 2016, threatening to add another layer of bureaucracy to the VAT system.
Since January 2015, companies which sell goods and services such as smartphone apps, e-books, music downloads or online training services to consumers in the EU, have been obliged to pay VAT at each customer’s local rate. Companies must collect data about where customers live to ensure they are paying tax at the correct rate.
“The new VAT rules mean affected companies face an increased compliance burden and billing becomes more difficult to manage,” says Amanda Tickel, tax partner at accountant KPMG. “In the first instance, businesses need to ensure their systems can capture the right sort of information to evidence where each customer lives and apply the correct VAT rate.”
Companies that turn over less than the current threshold of £82,000 a year in the UK will need to start paying VAT on their overseas sales within the EU but not on sales to UK-based customers.
The VAT mini one-stop shop (MOSS) service allows firms to make a single quarterly VAT payment rather than having to deal with tax officials in several countries.
Sally Beggs, deputy director of indirect tax at HM Revenue & Customs, explains: “The VAT MOSS system means that digital services suppliers will not have to register for VAT and provide a quarterly return and payment in every member state where they do business, reducing the administrative burden of implementing these changes. Businesses that have their main operation or headquarters in the UK will register with HMRC to use the service.”
Until 30 June 2015, smaller firms are allowed to use the information from their payment providers to decide where each customer is based.
But after this date, all companies will have to ensure that location details are recorded with each transaction – adding yet another layer of bureaucracy to the system.
The reform of the VAT system is aimed at preventing companies setting up in low-VAT countries such as Luxembourg and then being able to sell throughout the EU at lower tax rates. As such it is widely expected that the rules will soon be extended from digital-service retailers to sales of other products.
A spokeswoman for campaign group EU VAT Action says: “These rules are just the first wave of legislation. If you sell anything online, then you are next in the EU’s sights: similar rules are planned to extend to all goods and services as early as 2016.”
The spokeswoman adds that there is currently a turnover threshold of either €35,000 or €100,000 (depending on the country they sell into) for people distance-selling goods across national boundaries before having to register for VAT in that country. “But,” she warns, “this threshold will go too.”
Excellent communication and help
"The service was always efficient, emails were tesponded to quickly and efficiently. Would definitely recommend"This review was posted by Nella Mcgregor on the 27th of February 2017
"Jessica Purnell was great, she was helpful and everything was easy. I have saved £150 per month! many thanks Jess :-)"This review was posted by Melanie Baker on the 23rd of February 2017
Thank you Jess Purnell!
"Jess really helped us out with switching suppliers... she wasn't pushy at all and the service was great. Thanks again!"This review was posted by Becki on the 23rd of February 2017
Thanks for your help Mark Weeks and Switch My business
"I would like to thank Switch My Business and particularly Mark Weeks for the ease of switching and saving me money! I can highly recommend them. Thanks again Richard Blake"This review was posted by Richard Blake on the 22nd of February 2017
"Aaron sorted out a new electricity deal for my church, enabling us to make good savings. We have now received confirmation of our new 3 year plan.During our telephone conversations Aaron was always very polite and efficient. Dawn Marskell"This review was posted by Dawn Marskell on the 21st of February 2017