As people continue to seek clarification, it becomes more and more apparent that microbusinesses are going to be wrecked by this.
In her follow-up post The VATMOSS Mess Enters Looking Glass Land she follows up with this revelation
Generally, non-resident businesses that must register for VAT in another EU state face a nil registration threshold. A major exception to this rule is e-commerce to consumers, where foreign EU retailers have special EU distance selling VAT thresholds.
I’ll repeat that. Special EU distance selling VAT thresholds, which apply solely to digital transactions. Here they are. And guess what? None of them are anywhere close to zero. All of them would easily allow a micro-business such as Wizard’s Tower to keep trading.
So we really need to press HMRC for solid reasons why they are making such destructive changes to UK VAT legislation when it doesn’t seem as if other EU countries are doing so.
Meantime, the impossibility of compliance is already seeing microbusinesses shutting up shop.
change servers and all my data storage: to comply with the data protection rules, everything would have to be on EU servers. My server, which hosts 8 websites and some 20 URLs, and I don’t even know how many associated emails, is based in Canada. Dropbox, which backs up all my stuff, is based in the United States. I don’t even know where my Gmail server is.
Incidentally, I’ve seen people scoffing at questions about where an ebook is taxed if a UK customer on holiday in France downloads it. Holidays are one thing but what about the extended periods that EU citizens now spend in other member countries? My husband works for the UK subsidiary of a Dutch firm which also has a Romanian subsidiary & it’s not unusual for Dutch employees to spend 6 months in UK, or English employees to spend 6 months in Romania. What’s the position there? How is the seller supposed to collect the two non-contradictory pieces of information to identify the buyer’s location when the credit card comes from a Dutch bank and the IP address and telephone number of the landline delivering the product is in the UK or Romania?
Savvy Mums Business Website article, raising the issue of people being pushed back onto welfare benefits. Bear in mind that 80% of the recently self-employed are women.
You can only register for the MOSS if you are UK VAT Registered.
This means that Ann – our freelancer designer who also sells an ebook – is either going to have to register for VAT in every country she sells to, charge VAT to their residents and pay VAT due OR register in the UK and also register for MOSS.
And if Ann becomes VAT registered, all her prices go up by 20%. That’ll hardly help her business stay competitive, compared to similar traders who abandon digital products and can wait for the £80k threshold before they have to register.
The Government’s own service assessment of the VATMOSS portal “After completing our assessment we have concluded the VAT Mini One Stop Shop service should not be given approval to be a live service on the HMRC portal.” As of 3rd October 2014
Oh, they’ve also published an email address for queries. Since I have some very urgent ones over decisions I need to make soon about commissioning artwork and other ebook-related services, I wrote and explained my concerns. That email has bounced, telling me that’s an invalid recipient. Do we think that email address has gone down under a deluge of messages or it was never working in the first place due to some institutional incompetence?