I’ve just spotted this petition, via a retweet from Dan Counsell, and as a member of HMRC’s Joint SME MOSS Working Group as well as the owner of a microbusiness I thought I’d make a couple of comments.
It isn’t particularly clear from the petition, but the problem being raised is that in order to register for the Mini One Stop Shop in the UK, you currently need to be registered for UK VAT. This is something that we have been talking to HMRC about, and I have the impression that HMRC is amenable, in principle, to allowing non-VAT-registered entities to use the Mini One Stop Shop system, though the details of that have not been worked out.
Note also that your sales here in the UK will continue to be subject to ordinary UK VAT, and will not be reported through MOSS, and even if your UK-only sales are below the UK VAT threshold, it’s likely that you have expenditure in the UK that involves an element of VAT, so you might want to consider a voluntary registration in any event, in order to reclaim your input tax.
(There is a related issue within the Mini One Stop Shop itself, in that there are no thresholds for amounts reported via MOSS. HMRC did try to negotiate a threshold, but other member states didn’t support the idea and it was dropped.)
It is also worth pointing out that the Mini One Stop Shop is optional. You don’t have to use it. The alternatives are:
Use a digital “marketplace” (e.g. Apple’s App Store, Google Play, Paddle). Marketplace operators, as of the 1st of January 2015, are required by law to deal with EU VAT for you. You will only need to deal with B2B transactions between you and the store operator.
Register for VAT in EU member states into which you are selling. This will mean filing multiple VAT returns and complying fully with (up to) 28 different sets of VAT legislation.
Use a distributor in EU member states you wish to sell into. The distributor is a business, so you only need worry about a B2B sale; B2C sales will be made by the distributor within the member state(s) in which it operates.
Stop selling to other EU member states.
For a lot of digital micro-businesses, the best approach is likely to be to use a digital marketplace. MOSS gets you a single return and a single payment; unlike using a marketplace or a distributor, it does not free you from the need to comply with up to 28 different sets of VAT rules, though it makes doing so considerably simpler in a number of ways.
As regards determining whether your sale is in the EU or not, with very few exceptions (mostly having to do with e.g. mobile network operators, where there is an obvious way to tell where the customer is) you need to keep two non-contradictory pieces of information that identify your customer’s location. These might include, for instance
- Your customer’s billing address
- The result of IP geolocation
- Your customer’s telephone number
If those two pieces of information say your customer is outside the EU, then it doesn’t matter (from your perspective) if the customer was really stood in the middle of Brussels at the time; the rules say that you have done what is expected of you.