Some good news for those affected by VAT MOSS

Death and TaxesWe wrote about the introduction of Vat Moss quite a bit last year: it’s a new EU VAT regulation that meant that sellers of digital goods had to account for their VAT on such items at the rate relevant to the buyer’s location and not the seller. To add to confusion, on such sales, there was no £82k threshold under which VAT wasn’t payable.

On Friday, HMRC released a briefing note that will give some succour to SMEs who have been impacted by the new regs.

In a slightly vague part of the briefing note, it would seem that HMRC think some of the people playing ball are simply too small to be considered businesses worth worrying about. So whilst there is no threshold, they suggest that some may be just hobbyist that fall out side of the regs. Here’s what they say:

“HMRC’s analysis of the VAT MOSS returns submitted by UK businesses so far indicate that some of those registered for VAT MOSS may not be in business for VAT purposes. HMRC will contact those already registered for VAT MOSS whose returns suggest they may not be in business.” So keep an eye out for a letter if you’ve been complying but not selling a great deal.

Better news is that they further clarify the pieces of information a seller needs to collect and hold to verify the location of an overseas EU seller. It was originally two pieces, and there was a relaxation of that for year one, but now it seems that businesses under the £82k threshold only need one info and they can exercise their judgement on what that is:

“They (HMRC) are now going a step further and allowing businesses below the UK VAT registration threshold to exercise their best judgement. This means businesses can rely on any single piece of information, such as the address provided by the customer, to determine where their customer is located. This additional flexibility will provide additional help for businesses below the UK VAT registration threshold.”

Check out the full document here.