Beware new VAT laws, warns Roger

Small business owners who sell digital services are being warned to beware of new VAT laws.

Roger Bowen who runs TaxAssist Accountants in Llanelli said that many local small businesses and sole traders, including website and mobile app developers, providers of pre-recorded online training courses and musicians, could be affected by the new rules. He said:

“If you supply digital services to UK customers only, or to other VAT-registered businesses, then these changes do not apply to you. Anyone who provides digital services to consumers in other European Union member states will now have to pay VAT in that country. Unfortunately, there is no de minimus income level, so even if you have a full time job and you develop apps as a side-line, these changes could affect you.

“To comply with the new law, business owners must register for VAT with each country they sell to. There are 28 countries in the EU with 75 different VAT rates, so the costs and administrative burden could be enormous.

“To avoid this headache, there is the alternative to register with HMRC’s Mini One Stop Shop scheme – or VAT MOSS – and submit a single quarterly return and VAT payment. HMRC then sends the information and pays each relevant country’s tax authority. This route doesn’t escape the need to register for UK VAT, but thankfully HMRC have confirmed that domestic sales won’t have VAT applied to them provided they’re under the VAT registration threshold.

“There has been a storm of protest to this new legislation from small business owners across the UK, who are telling the Government it would wipe out any benefits to trading in Europe.”

TaxAssist Accountants Llanelli is a local business, operating across Carmarthen, Llanelli and Swansea, providing tax and accountancy advice and services purely to small businesses.