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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 EU member states. Some simplifications are already in place and this brief announces 2 new areas of help for the smallest businesses.

Who should read this brief

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.

Simplifications 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.

Evidence 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 evidence.

HMRC 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.

Consider 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.

HMRCís 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.

Guidance on what you need to consider when deciding whether your activity is by way of business can be found in HMRCís VAT Business/Non-Business Manual.

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 consumers.

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 the HMRC VAT MOSS mailbox at or write 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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Article Published/Sorted/Amended on Scopulus 2016-01-18 10:15:35 in Tax Articles

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