It seems that lobbying by the media, and the creation of an online petition, has spurred the Government to change a VAT rule that thousands of UK business owners claimed was putting their companies at risk.
An EU regulation, due to be introduced on January 1 2015, would have forced UK firms selling digital services, such as ebooks and e-courses, in Europe to register for VAT in every country, as VAT on digital products will be chargeable in the place of purchase rather than the place of supply.
Alternatively, small business owners would have to register for a VAT “Mini One Stop Shop” (VAT MOSS) by registering for VAT in the UK, which would funnel the tax payments automatically but make the seller liable for VAT domestically, even if they fall below the threshold.
On Tuesday, 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.
A spokesperson for HMRC is quoted by the Telegraph:
"Businesses below the current VAT registration threshold that can separate their sales to UK customers from sales to EU customers can voluntarily register the cross border element of their business, and then use that registration number to register for MOSS. This means that their domestic sales will remain VAT free."
Tax does have to be taxing.
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