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Posts Tagged ‘VAT’

What on earth is VAT MOSS? A new species of plant??

Tuesday, February 2nd, 2016

In an attempt to make life easier for businesses who sell digital products into the EU and need to charge VAT at the local EU country rate, the government established the VAT ‘Mini One Stop Shop’. Sounds rather fun I know, rather like a American drive through or drug store. Sadly, it is not quite the case and instead you are offered an online portal aimed at simplifying things by offering you the opportunity to register your business for the VAT scheme just once rather than having to register in every single country you will be supplying your digital products to. You can then submit just a single return.

Note: even if you are below the UK VAT threshold for having to register for VAT ( £81,000 for 2014-15), you still have to charge VAT as above for your cross border sales. However, this does not mean you have to charge your UK customers VAT.

Copyright 2016 Goburo

Picture Copyright 2016 Goburo

Digital on-line sellers: have you got to grips with the new VAT rules?

Tuesday, February 2nd, 2016

The new VAT rules have been in effect for over a year now and yet not many businesses are aware of them. In a nutshell a business may have to pay VAT on its sales even though it is not registered for VAT AND at a higher rate than the UK! How is this possible? In order to stop global companies from basing themselves in countries with lower tax rates, the lawmakers decided to create a level playing field for UK businesses by making them pay VAT on sales of digital products to the EU  at the rate applicable in the country they are selling to!

So how do you know if the rules apply to you? Find out in 5 easy steps:

  1. Determine whether you are supplying a “digital service” (because if it isn’t, the general place of supply of services rules will apply).
  2. Determine the status of your customer ie, business or non-business. If it is a non-business, the rules apply
  3. Determine the place of supply (ie, the member state).
  4. Determine whether the supply must be taxed at the member state’s standard or reduced VAT rate, or whether it is eligible for any VAT exemptions (eg, most member states exempt betting and gaming).
  5. You need to identify the place where your consumer is based, has their permanent address, or usually resides. This will be the member state where VAT on the digital services supply is due. So if, for example, a UK citizen is an ‘expat’ who works or lives most of their time in Spain, then you, as the person supplying digital services to that consumer, should be charging Spanish VAT on those services and not UK VAT.

There is a handy flow chart to help you decide whether the rules apply to you or not here.

For more information go to the government hub here

 

Selling online? Be clear on the price

Wednesday, February 4th, 2015
Image copyright Success Pacific

Image copyright Success Pacific

By law, under the Consumer Contracts Regulations, you must tell consumer customers exactly what they are paying for and you cannot assume anything. SO this means you set out the following details under your pricing terms  BEFORE the customer is committed to the sale:

  • The total price of the products inclusive of taxes or (if the nature of the product is such that the price cannot reasonably be calculated in advance) the manner in which the price is calculated.
  • Where applicable, all additional delivery charges and any other costs (for example, postage, packing or insurance) or, where those charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable.
  • In the case of a contract of indeterminate duration or a contract containing a subscription, the total costs per billing period or (where such contracts are charged at a fixed rate) the total monthly costs.
  • The telephone charges or other communication costs where that cost is calculated other than at the basic rate.

Remember: When selling to consumers, all prices must include value added tax (VAT). If the amount of VAT is not stated, it is implied that the price is inclusive of VAT.

Beginner’s guide to new VAT rules on digital products

Wednesday, January 21st, 2015

You may have recently seen articles in the press regarding the new ‘VAT Moss’ rules and wondered what on earth it is all about. The idea is that where digital services are supplied on a business to consumer basis, the supplier is responsible for accounting for VAT on the supply to the tax authority at the VAT rate applicable,in the consumer’s EU member state. This applies even if the supplier is not VAT registered

VATThe aim is to create a level playing field for UK businesses by removing the current competitive advantage of EU member states with lower rates of VAT.

So how do you know if the rules apply to you? Find out in 5 easy steps:

  1. Determine whether you are supplying a “digital service” (because if it isn’t, the general place of supply of services rules will apply).
  2. Determine the status of your customer ie, business or non-business. If it is a non-business, the rules apply
  3. Determine the place of supply (ie, the member state).
  4. Determine whether the supply must be taxed at the member state’s standard or reduced VAT rate, or whether it is eligible for any VAT exemptions (eg, most member states exempt betting and gaming).
  5. You need to identify the place where your consumer is based, has their permanent address, or usually resides. This will be the member state where VAT on the digital services supply is due. So if, for example, a UK citizen is an ‘expat’ who works or lives most of their time in Spain, then you, as the person supplying digital services to that consumer, should be charging Spanish VAT on those services and not UK VAT.

There is a handy flow chart to help you decide whether the rules apply to you or not here.

For more information go to the government hub here

PS ‘Moss’ stands for ‘mini one stop shop! No moss was harmed in this ruling!

Is Current VAT System Disrupting your cashflow?

Monday, March 26th, 2012

Are you considering importing and exporting goods to and from outside the EU?

If so, you should be aware that many such British businesses claim to suffer cash-flow difficulties as a result of the alleged inefficiency of HMRC’s VAT reimbursement system.

Whereas the date upon which a company’s VAT needs to be paid is fixed under the Deferment scheme, HMRC do not repay the money on any fixed date.  HMRC argue in their favour that they aim to authorise at least 90% of correct VAT repayment returns within 10 days of receipt, but because some returns are selected for credibility checks, they cannot specify a particular date on which the money will be repaid.