Good news from HMRC for UK SMEs #vatmoss

Now don’t get too excited, but we’re pleased to say that with not much more than 48 hours before the new VAT rules for UK vendors of digital goods come into force, there is a snippet of good news.

To recap on #vatmoss: the change due on 1st January will require sellers of digital goods (such as downloads, ebooks, music etc) to charge VAT based on the buyer’s location within the EU and not on the location of the seller as is currently the case.

Perhaps more irritatingly, the seller will have to verify the location of the buyer using two pieces of distinct information and retain that info for some years. Oh, and there won’t be a VAT threshold on such goods. You’ll have to start complying when you make your penny’s worth of sales.

There’s been much said and written about it on here and elsewhere.

But in new guidance from HMRC released today, there is a bit of good news. If you’re a micro-business trading below the £81k VAT threshold, they are loosening the proof they require to establish the locale of the buyer. Until the end of June, the confirmation of your payment provider will suffice. Find the full note verbatim below, you can find it online here:

Support for MOSS registered micro-businesses until 30 June 2015
UK micro-businesses that are below the current UK VAT registration threshold, and who register for the VAT Mini One Stop Shop (MOSS) may, until 30 June 2015, base their ‘customer location’ VAT taxation and accounting decisions on information provided to them by their payment service provider. This means the business need not require further information to be supplied by the customer. As payment service providers already collect and hold a minimum of 2 pieces of information about the member state where the customer usually resides, the transitional period, until 30 June 2015, will give micro-businesses additional time to adapt their websites to meet the new data collection requirements.

Now, it is a small and modest change but it does represent good news. Firstly, it does make a real difference to the smaller businesses who will have to implement the change from Thursday. Secondly, it also demonstrated that HMRC are will to listen and change in the face of persuasive pressure and that’s a good thing.

Several groups continue to lobby HMRC and the EU commission and we hope that they manage to elicit more good news soonest.