Archives for December 2014

New VAT rules on Digital Services (VAT MOSS)

This is a guest post from Les Howard, VAT Consultant, who helps many people through the VAT maze. delivers VAT training in a number of contexts, writes about VAT in technical periodicals, and in general business magazines. In this blog, Les helps to unravel the details and rules surrounding HMRC’s new VAT MOSS scheme…

New VAT rules on Digital Services (VAT MOSS)

HMRC1 January 2015 marks the formal introduction of a significant new VAT regime which will affect suppliers making B2C digital supplies of services. The new regime is called MOSS (Mini One Stop Shop).

Some technical stuff!

VAT rules determine the ‘place of supply’ of cross-border supplies. Until 31 December 2014, the place of supply of B2C digital services is the place the supplier is established. For a UK-based business, UK VAT applies. If the supplier is not registered, then no VAT is charged.

From 1 January 2015, the place of supply is the country where the recipient is located. A UK supplier therefore has to charge French VAT to a French customer.  Without the introduction of MOSS, a UK supplier would find him/herself liable to be registered in a number of EU Member States. (There is no VAT registration threshold for non-nationals.)

What if I don’t want to use MOSS?

You can opt to register in each Member State in which you make sales. That would be an administrative nightmare!

Does MOSS apply to me?

Yes, if you supply B2C digital services to customers living in the EU. Digital services are telecommunications, broadcasting, and electronic services supplied with ‘minimal or no human intervention.’

How do I register for MOSS?

There is a portal on the HMRC website. It is a similar process to the usual VAT registration process. There is no provision for completing a hard-copy form; and you have to register in your own name. The portal does not allow an Agent to register a client taxpayer.

My turnover is less than £81,000. Do I have to register?

The legislation forces a UK business to register for VAT in the UK in order to register for MOSS. HMRC have issued a concession (Brief 46) which means that, having registered, you can ignore your UK sales, and only account for VAT on your EU (non-UK) sales. You simply enter £0.00 in the relevant boxes of your UK VAT Return.

How do I work out my MOSS VAT Return?

You need to provide the gross value of sales made in each EU Member State for each calendar quarter. The MOSS portal calculates the VAT due for each Member State, and tells you how much VAT to pay. You are required to submit and pay by the 20th day of the next month.

How do I determine where my customer is located?

All you need is 2 pieces of non-contradictory evidence. Your sales system should obtain this for you. You can use: postal address, credit card number, SIM number, bank account sort code. You need to retain this information for ten years.

What VAT can I claim?

The MOSS Return does not allow you to claim VAT (input tax). But you can claim UK VAT, as least in part:

  • If your UK sales are less than £81,000, and ignored (see above), you will only claim VAT in relation to non-UK sales, on your UK VAT Return.
  • If your UK sales are over £81,000, of if you choose not to ignore them, you will claim all the VAT you are charged on your UK VAT Return.
  • You cannot reclaim any VAT incurred in another Member State. You need to submit a separate claim using the Refund Scheme.

 For more information, contact Les at vatadvice.org or on twitter @LesVatAdvice