HMRC bungles VATMOSS, again

Important VATMOSS update
On 1 December 2016 the European Commission announced a package of proposed reforms to the VATMOSS scheme. Please read this post for the latest updates, as some of the proposed changes may affect the situation described in the post below.

This happened today.

VAT Notes 2015 Issue 1 now says nothing about VATMOSS at all.

Thanks to Google Cache I have been able to pull up the text that HMRC deleted due to “errors”:

VAT place of supply of service rule changes and the VAT Mini One Stop Shop (VAT MOSS)

Please make sure everyone responsible for VAT in your business reads this newsletter.

The new rules regarding the taxation of cross border business to consumer (B2C) supplies of digital services came into effect on 1 January 2015. VAT on these supplies must now be charged and accounted for in the consumer’s, rather than the supplier’s, Member State using the VAT rate in force in the consumer’s Member State.

If you make B2C cross border supplies of digital services and you are already registered for VAT in the UK, log in to HM Revenue and Customs (HMRC) online service (with the User ID and password that you use to access the VAT Online service) to register for the VAT MOSS scheme. This is probably the simplest and easiest way for you to account for the VAT due on these supplies. However as VAT MOSS is an optional simplified VAT accounting service, you can choose to register for VAT with the tax authorities in the Member States where your consumers are normally resident to account for the VAT on your B2C digital service supplies.

If you do not want to register for VAT in other European Union Member States, you must register for VAT MOSS by the 10th day of the month following your first digital services supply. For example, if you make supplies on 8 January 2015 and want to use the VAT MOSS scheme to declare sales in the calendar quarterly tax period ending 31 March 2015, you must register with HMRC by 10 February 2015. Your VAT MOSS scheme registration will be backdated to the date of the first cross border digital services sale on 8 January.

Digital service supplies before 1 January 2015 do not count as a ‘first supply’ for the purposes of VAT MOSS. So your first supply, for the purposes of a VAT MOSS registration, is always your first digital services sale on or after 1 January 2015, regardless of whether you made any sales before 1 January 2015.

VAT MOSS return periods are calendar quarters (the first return period runs from 1 January to 31 March) and, from 1 April 2015. You’ll be able to complete your VAT MOSS returns online.

Make sure that you have everything you need to complete your return. Please note that there are transitional measures that cover supplies made with a mix of old and new rules, if this affects you.

Guidance is available for businesses supplying e-services to consumers through an internet portal, gateway or marketplace. You need to determine whether you are making the supply to the consumer or the platform operator.

For more information on all these points read ‘VAT: supplying digital services to private consumers’.

That looks pretty straightforward and in line with everything we have been told from every authoritative source to date. It begs the question: what is in error? What part of that is wrong? Where is the clarification on what is right? And what was so wrong that the entire VATMOSS section, not just one error, needed to be deleted? The document was issued on 2 March but references a hypothetical 10 February deadline. Surely it has to be something more than that.

The clarification only notes:

5 March 2015 3:11pm The item concerning VAT Mini One Stop Shop (MOSS) has been removed for correction due to recent changes in the operation of this procedure. Further updated guidance will be issued shortly.

Welcome to the “level playing field” of having to bring your business, products, and services into compliance with a VAT law that the tax authority can’t even get right.

Update 9 March: the guidance now says

VAT place of supply of services rules changes and the VAT Mini One Stop Shop (VAT MOSS)

The new rules regarding the taxation of cross border business to consumer (B2C) supplies of digital services came into effect on 1 January 2015. VAT on these supplies must now be charged and accounted for in the consumer’s, rather than the supplier’s, Member State using the VAT rate in force in the consumer’s Member State.

The Mini One Stop Shop (MOSS) provides a helpful simplification measure for those businesses impacted by the 2015 VAT place of supply changes. It allows a business to register with HM Revenue and Customs (HMRC) and make a single declaration every calendar quarter covering all the VAT due in every other Member State. HMRC wants to encourage UK businesses to register to use it. If you have not registered by the deadline (the 10th day of the month following your first digital services supply) then please email HMRC for advice, before you register for the service, at VAT2015.contact@hmrc.gsi.gov.uk

So the first paragraph is the same, and the second is a statement of fact.

Is anyone else sick and tired of this yet?

About the author

Heather Burns is a digital law specialist in Glasgow, Scotland. She researches, writes, publishes, consults, and speaks extensively on internet laws and policies which affect the crafts of web design and development. She has been designing and developing web sites since 1997 and has been a professional web site designer since 2007. She holds a postgraduate certification in internet law and policy from the University of Strathclyde. Learn about hiring Heather to write, speak, or consult.

1 thought on “HMRC bungles VATMOSS, again

  1. It’s also worth noting that the whole thing starts with ‘Make sure whoever’s responsible for VAT in your company reads this’. So if you’re not already responsible for VAT you can ignore this in good conscience?

    And there is absolutely no mention of the crucial fact that this new regulation applies to everyone below the UK VAT threshold as well if they’re selling digital items.

    Okay, then, so that means all the companies who don’t yet know they’ve suddenly been made liable for all this will remain in ignorance even if they do read this!

    What’s being done about that?

Comments are closed.