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eBusiness, EU and VAT - affects those not VAT registered

Couldn't find anything on this by search.

The rules are changing thanks to EU regs.


It is complicated, but basically you are supposed to charge VAT at the rate of the country where the buyer is located at the time of the purchase. Affects folks selling downloads whether it is knitting patterns or self-pub books or small press.
At present, as of 31st December, if you get it wrong you can be fined - and the fines are massive.

Still time to lobby. Go see the blog above they also have a letter writing page.

It's on the HRMC web site...

and also GOV.UK

there is a lot of very conflicting 'advice' doing the rounds about this, with it becoming increasingly apparent that the powers that be had no idea just how many teensy tiny businesses, for example, just selling a handful of knitting patterns a year via platforms such as Ravelry, are affected by this.

There are some solutions for many types of business, at least for the initial period when everyone is desperately trying to work out what is going on, but it also looks very much as if not all affected countries are enforcing the new rule equally.

For the knitting/crochet pattern writers on here, if you didn't already know, Ravelry has teamed up with a UK vat registered pattern wrangling service to offer at least one legal and easily used solution to gathering and processing the vat, but I'm not sure what easy options there are if you sell other digital products.

If you use social media, you'll also find a lot of the current debate under #vatmoss and #vatmess

How can anyone Not vote for Nigel Lafarge now ? Laughing Laughing

what is flummoxing a fair few people about this new rule is that even if you are, for example, based in the US, and you sell a digital product to the EU, you will be expected to remit vat at the rate in that country, regardless of your own business point of origin. Its causing many headaches worldwide, not just in the EU

............, based in the US, and you sell a digital product to the EU, you will be expected to remit vat at the rate in that country,.............

One forsees all those happy smiling "Expectant little faces" sadly destined to experience the pangs of disappointment ! Laughing Laughing

What a load of old tosh ! Laughing Laughing

The microbusiness action group folks have actually had meetings with HMRC and Treasury, so they are getting their confusion direct from the horses mouth, not via internet whispers.

They are asking that people sign up -

"Please add your name, your website details and a brief description of your business in a comment.

That is all we need at the moment, to help gauge the impact of all this.

As we get a clearer picture of the numbers of businesses and the sorts of traders affected, then relevant mailing lists, article links and other resources can be added to this site."


Does this affect non VAT registered businesses?

Cant see it mentioned anywhere that non reged sellers have to charge it.

Does this affect non VAT registered businesses?

Yes. That's why it will have a significant impact for micro businesses selling digital services.

What is particularly worrying is that once you apply to be VAT registered in the EU which you will have to do even if you sell just one digital item worth 5 then you (may) lose UK VAT exemption...

It has particular effects for small businesses with turnovers of less than 81,000 per annum, who had previously been exempt from VAT.

In a nutshell, once they register to pay VAT in EU countries, they lose this exemption and will be forced to pay VAT in the UK as well.

there are also mutterings about this being a lead up to the same policy being extended to non digital products in a couple of years, so even if your current product list makes you think 'ha, it doesn't apply to me', its worth being supportive of those trying to get HMRC to recocgnise just how micro businesses work and how this will affect them, because it may yet come back to bite everyone sally_in_wales

this seems to be the latest briefing note from HMRC and thankfully its fairly easy to understand for a change vegplot

this seems to be the latest briefing note from HMRC and thankfully its fairly easy to understand for a change

The bit that says "you will not lose your UK VAT registration threshold." is re-assuring.

Microbusiness Action Group have posted a link to a survey

Where you can give the impact on your business, or your planned business. Also feedback on when you were informed, how, who by and how baffled you still are. Only takes a couple of minutes.

They are asking people to fill it in as a matter of urgency, and to do it from where ever in the world you are trading from.

And there is now also a petition to the EU parliament asking them to suspend the new ruling for microbusinesses and sole traders.

Needs several thousand more signatures.

Very interesting update here with clear notes on what to write to your mp about, remember, in a year this might affect all small businesses not just digital ones
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