Tax was in the
news again last week for all the wrong reasons: the BBC uncovered a
blatant NIC avoidance scheme, and The Telegraph newspaper published a
leaked HMRC memo concerning late filing penalties. We explain how both
these issues could affect you and your clients. We also have news of
developments relating to the operation of VAT MOSS.
New rules for applying
local rates of VAT to digital services supplied across EU borders came
into effect on 1 January 2015, but guidance on how to account for the
VAT due under VAT-MOSS was released very late. A concession for UK
traders who aren’t VAT registered, to allow them to use VAT-MOSS without
having to charge VAT to their UK-based customers, was issued almost at
the last minute.
A second concession
concerns the records required to determine where the customer is based.
Small businesses are allowed to rely on the customer location
information provided by their payment service provider (eg PayPal). This
concession was announced as a temporary measure to apply to 30 June
2015, but it is now permanent for UK businesses who are not VAT
The role of the tax
agent in helping clients to comply with VAT-MOSS appears to have been
added as an after-thought in the design of that system. As a tax agent
you can’t register your clients for VAT-MOSS, but you can submit
VAT-MOSS returns on their behalf if you register as a VAT-MOSS agent.
Details of how agents can register were published on the GOV.UK website on 21 May 2015. The first deadline for submitting a VAT-MOSS return was 20 April 2015.
If your clients are
providing digital services they are likely to be invoicing
electronically as well. Take a look at the new guidance on electronic
invoicing in VAT Notice 700/63.
Finally for clients who
are disgruntled about the VAT-MOSS regime, there may be light at the
end of the tunnel. The EC has acknowledged in a report on the digital
single market the administrative burden that VAT imposes, and has
recommended there should be a common EU-wide VAT threshold to help small
This is an
extract from our tax tips newsletter dated 4 June 2015. The newsletter
itself contained links to related source material for this story and the
other two topical, timely and commercial tax tips. It’s clearly written
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