New VAT rules are coming into force on 1 January 2015.
The changes only affect if the following categories are relevant:
- It is a BTE sales (Broadcasting, Telecommunications or E-Service)
- It is a sale to a consumer (non-business, individual)
- It is an EU sale.
If all three are met then VAT is charged at the country’s rate where the consumer is based. It is also payable to that country’s VAT authority. This can be done under MOSS scheme – ie you pay to UK & they pass on.
Points to bear in mind:
An E-Service involves minimal human intervention and the service would not exist if there were no internet. E.g. music downloads, apps, software, website supply/hosting, supply of images, e-books. These rules do not apply to goods.
The UK has a high VAT threshold compared to other EU countries (e.g. Ireland = €35,000). A business may not be UK VAT registered but still be caught by these rules, if threshold in EU country exceeded.
Other EU countries require you to keep records for longer (e.g. Poland = 10 years).
MOSS returns are due on calendar quarters (31 Mar, 30 Jun, 30 Sept & 31 Dec).
Clearly these are very important changes and therefore an urgent review of all accounting systems is should be completed in order to ensure that you business is ready and thereby alleviating the risk of potential penalties being charged in the future.
The above is only a brief review of the new rules and therefore professional advice should of course always be taken.