Last week I wrote about a government "concession" wrt an EU VAT rule that will come into force 1 January 2015, regarding VAT registration requirements for firms selling digital services:
"HMRC conceded that while micro companies are still obliged to register for VAT in the UK to use MOSS, they will no longer be forced to charge UK VAT on their domestic sales."All very well and "flexible" of HMRC and the government, maybe.
However, I also noted:
"The thorny question of proving online where someone actually resides is of course another matter!"Fear not, HMRC have covered that and (of course) have made things a lot more complicated for the hapless SME's selling digital services.
As per HMRC:
"When you provide digital services in the circumstances below, you can presume that the location of your consumer is as specified below. If the service is supplied:All clear?
Where one of the presumptions apply, you’re only required to retain evidence showing the relevant place (for example, the place where the decoder is installed).
- through a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby, the consumer location will be the place where the services are provided - for example, the member state where the phone box/kiosk etc is located
- on board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the consumer’s journey
- through an individual consumer’s telephone landline, the consumer location will be the place where the landline is located
- through a mobile phone, the consumer location will be the country code of the SIM card
- through a decoder, the consumer location will be the postal address where the decoder is sent or installed
However, if you choose to, you may rebut the presumption using alternative evidence. To support this decision you’ll need to collect and to keep 3 pieces of non-contradictory commercial evidence. If you’re providing digital services in circumstances not listed above, you’ll need to support your decision about the consumer’s location by providing 2 pieces of non-contradictory commercial evidence."
Tax does have to be taxing.
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Err. Seems fairly clear given the trickiness of the subject matter, though no doubt other situations will emerge in due course that aren't covered by the "presumptions". I daresay the list will grow...
ReplyDeleteHow would you have approached it to make it simpler, Ken?
Stew G
I would simplify the whole thing and let the SME's off the VAT and the need to provide proof of domestic sales.
DeleteNot legal. Unfortunately. But Ken, if you can't understand that, I sure as hell wouldn't want to be one of your clients.
DeleteIt is up to member states to specify what evidence is required to determine location. It does not have to be this difficult for small businesses.
DeleteThe EU and in turn HMRC simply did not understand the complexities of all this and are still splashing around for a workable solution
I would have left it as it is for SMEs. As I've said elsewhere, a small businesses is not a smaller version of a big business.
ReplyDeleteHow much red tape do you want in OUR country?
DeleteDear HMRC,
ReplyDeleteI sell via a third party platform and my clients all seem to come in via proxy servers with the same IP address.
They all pay in Bitcoin and for a reason I am not clear on most of them put their place of residence as outside the EU.
Please advise.
Although this is not HMRC's fault, the idea of dealing with them even more than I have to now as a sole trader fills me with dread. Add to that the idea of using another HMRC IT system and I have decided to call it a day.
ReplyDelete"...non-contradictory commercial evidence..."
ReplyDeleteAstute followers will find some irony in the fact that the good old, reliable CMR is amongst these items!
You could not dream it up.