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Mini-One-Stop-Shop – Moss Scheme to be implemented by HMRC from 1st January 2015.

Value-Added Tax (VAT) is one of the most complicated taxes that is charged on the sale of a final good to the consumer. It is a form of sales tax which is charged across the European Union (EU). Even though VAT may be charged on goods and services within the EU, the VAT rate from country to country is not always the same. In order to determine what VAT rate applies to your sale of goods or services, the ‘Place of Supply’ rules are adopted by businesses.

Currently, the UK VAT registration threshold is £81,000 meaning that businesses with a VAT taxable turnover which exceeds this must register for VAT. Those businesses that do not exceed this can voluntarily register for VAT. This could yield certain advantages (please see the next business tip).

Those businesses that supply digital and electronic services to consumers within the EU currently charge UK VAT on these products. This VAT is then declared on their quarterly VAT return with the output VAT paid over to HMRC. This is due to there being a business (UK) to consumer (non-UK) supply [B2C]. This means that the place of supply mentioned above is within the UK and therefore UK VAT applies.

However, from 01 January 2015, this B2C supply between a UK business and non-UK consumer will be where the consumer is and therefore, that country’s VAT rate will apply. This means that if a UK business supplies these e-services to non-UK countries, they would be liable to register for VAT in each of the countries they supply and account for VAT that way.

However, to simplify things, businesses can (as of October 2014) opt into a VAT Mini One Stop Shop online service (MOSS) which eliminates the need to register for VAT in each EU country that it deals with. This will eliminate the need to register in each country. By reporting through MOSS, the correct VAT rate will be applied and the relevant VAT will be paid over to the relevant tax authority.

For more information about MOSS and how Wisteria’s VAT team can assist you, contact us here or call 020 8429 9245. Alternatively you can email info@wisteria.co.uk for assistance.

Disclaimer – Thresholds and rates are correct at the time of writing – September 2014.