VAT Mini One Stop Shop – MOSS Overview
On 1 January 2015, there will be an important change to the VAT place of supply of services rules. This relates to supplies of e-services (video on demand, downloaded applications (or ‘apps’), music downloads, gaming, e-books, anti-virus software and online auctions), broadcasting and telecommunications, together known as BTE.
Currently, the place of taxation for BTE supplies is determined by the location of the supplier of the services, i.e if you are based in the UK all your supplies are deemed as being in the UK and therefore subject to UK VAT. If your total income in the year does not exceed the VAT Registration limit (currently £81,000) there is no need to register for VAT in the UK.
However, from 1 January 2015, the place of taxation will be determined by the location of the consumer, so if your customer is based in France the supply will be deemed as being in France and subject to French VAT. This means that the UK business would be required to register for VAT in France, and any other EU countries to which it makes BTE sales.
However, in order to “simplify” the process and save businesses having to register for VAT in every EU member state where they supply BTE to consumers, they may opt instead to use the VAT MOSS online service. Businesses are able to register from October 2014 and this is live with effect from 1 January 2015.
The VAT MOSS online service enables the UK business to submit a single calendar quarterly return and VAT payment to HMRC, who will send the appropriate information and payment to each relevant EU member state’s tax authority.
Once your business has registered, from 1 January 2015 you must use the scheme to account for VAT on all your supplies of digital services to EU consumers. But you can’t use it to report supplies to consumers in the same member state as your business (i.e the UK).
The really bad news is that there is no registration limit as there is for UK VAT, so that even a sale for £1 to any EU consumer will result in a business having to register for the VAT MOSS online service. It had looked like this would also involve the business having to register for UK VAT and therefore be liable to VAT on all UK sales as well, even if the total turnover is well below the UK registration limit. Fortunately, HMRC seem to have climbed down on this and provided you are able to separate the UK sales from EU sales. A spokesperson for HMRC has said, “Businesses below the current VAT registration threshold that can separate their sales to UK customers from sales to EU customers can voluntarily register the cross border element of their business, and then use that registration number to register for MOSS. This means that their domestic sales will remain VAT free.”
It is important to note that there is no need to account for VAT on sales to EU VAT registered businesses. Therefore the rules will involve new record keeping as affected businesses will need evidence of both the business status and the location of their customers.
One way to avoid having to deal with this issue is to make sales through corporate platforms such as iTunes as in almost all circumstances the EU consumer will be buying from them rather than your UK business.
You must submit your return before:
20 April - for returns covering 1 January to 31 March
20 July - for returns covering 1 April to 30 June
20 October - for returns covering 1 July to 30 September
20 January - for returns covering 1 October to 31 December
You won’t be able to submit your VAT MOSS return before the end of the return reporting period.
Pay your VAT MOSS bill
You should pay your VAT MOSS bill either at the same time as submitting your return or before the due date of the return. You should quote the payment reference number provided by the online service when you make your payment.
HMRC will send you an electronic reminder 10 days after the payment was due if you’ve not paid the full amount.
HMRC have stated that further guidance on paying your VAT MOSS bill will be published early 2015.