HM Revenue and Customs Brief 4/16 - VAT MOSS - Simplifications for businesses trading below the VAT
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Published 8 January 2016
Purpose of this brief
This brief outlines the simplifications available to
businesses trading below the UKís VAT registration threshold (currently
£82,000) that make supplies of digital services (telecommunications,
broadcasting or electronically supplied services) to consumers in other
states. Some simplifications are already in place and this brief
announces 2 new areas of help for the smallest businesses.
Who should read this
You should read this brief if you provide digital services to
consumers or other non-business customers in other EU member states and
your total turnover is below the UK VAT registration threshold.
On 1 January 2015 the VAT place of supply for digital services
supplied to consumers and other non-business customers inside the EU changed from where
the supplier belongs to where the customer belongs. Businesses making
these supplies became liable to register for VAT in each country where
they supplied digital services.
To make it easier to comply with this change the VAT
MOSS system was introduced. Businesses using VAT MOSS can
declare and pay the VAT due on their sales of digital services to
customers across the EU
using a single return and payment. This can be done in their home
member state, instead of registering for VAT in every member state
where the VAT is due.
More information on the place of supply rules can be found in
the guide VAT:
supplying digital services to private consumers.
if you trade below the UK VAT registration threshold
The UK has introduced additional measures to reduce the impact
of the changes for smaller businesses.
of where your customer belongs
Businesses need to determine where their customer is located.
There are specific
rules in place for certain types of transactions.
For all other supplies of digital services, the normal rule is
that businesses must collect two pieces of non-contradictory
information to evidence their customerís location.
From the start, HM Revenue and Customs (HMRC) has
allowed UK businesses that are below the UK VAT registration threshold
and registered for VAT MOSS to base their customer location decisions
on a single piece of information provided to them by their payment
service provider. HMRC
introduced this simplification in response to feedback from small
businesses that said that they found it difficult to obtain 2 pieces of
recognises that some small businesses have still found this difficult.
They 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.
if youíre in business Ė and therefore within the scope of the changes
There is no registration threshold on cross border supplies of
services and businesses of all sizes fall within the scope of the
changes. However, this only applies where supplies are made in the
course or furtherance of a business. If activity is carried out as a
hobby (ie only on a minimal and occasional basis), HMRC does not
normally see this as a business activity for VAT purposes.
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.
will contact those already registered for VAT MOSS whose returns
suggest they may not be in business.
Guidance on what you need to consider when deciding whether
your activity is by way of business can be found in HMRCís VAT
VAT MOSS registration
One of the existing simplifications is that businesses that
fall under the current VAT registration threshold of £82,000 may register
to use VAT MOSS for their cross border sales. These
businesses can still benefit from the UKís domestic VAT registration
threshold and do not have to account for VAT on supplies to UK
What to do
if you have any questions
If you have any questions about this brief or you would like
to discuss your VAT MOSS registration in more detail, please contact
VAT MOSS mailbox at firstname.lastname@example.org
to the VAT Written Enquiries Team.
About the Author
© Crown Copyright 2015.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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