"One site to rule them all..."

If, like me, you have cause to visit any of the UK government's websites you will find there has been lots of changes recently, and many of the separate sites for different depts have all come together under one umbrella  .gov.uk domain, from which much of the old useful info has vanished and lots of arty farty new stuff has appeared.

The first impression was that I had landed on one of those ubiquitous domain parking pages full of spurious links and advertisements for dubious pharmaceuticals or gambling setups. Who thought that was a good design for the UK government portal?

Scrolling down past the parking page section, I found a notice on the front page that says,
The websites of all government departments and many other agencies and public bodies are being merged into GOV.UK. 

Well that's not quite true, as revealed on the page mentioned above, where it says the following have merged: 

• All 24 Ministerial Departments
• The offices of the PM and DPM
• 9 of 22 non-Ministerial departments (are these not government departments?)
• 144 of 349 Public Agencies and Bodies (it should be 145 but perhaps they have mislaid one somewhere...)
• 71 High Profile Groups (go read the list if you really want to know who they are!)
• 12 Public Corporations (ditto)
• 3 Devolved Administrations (Northern Ireland, Scotland and Wales)

So when it says all government departments are being merged, what it really means is 35 of the 48 have merged (well that's almost 73%, which is pretty close-ish!) and the rest are not going to do so. As various wise men have observed over the years, there are "lies, damn lies and statistics".

However back to super-gov...
I quite often popped over to various of the old sites to look something up, and there was always lots of useful info on each of the dedicated domains. Sites like the Charity Commission, DEFRA, Dept. of Work and Pensions, OFSTED, all had helpful easy to find pages, which were designed to suit the data presented. Now we have a one-size-fits-all supersite that looks like a social media wannabe. All it lacks are the avatars of each Minister down the right hand side and the option to Like or Poke a Minister (oooerrr missus!) and the job's a good'un!

It has sections for Popular on GOV.UK (apparently student finance, driving theory tests and renewing vehicle tax comes in there;  Most Active (student finance, driving theory tests and renewing vehicle tax figure in there too!);  or if you are bored and want something to read that's allegedly better than watching paint dry you could check out GOV.UK blogs - Search the list of GOV.UK blogs, and find one to match your interest.  Here you can find such delights as, "My visit to Manchester: how the Civil Service is becoming more innovative, collaborative and efficient" (presumably by going to Manchester); "How digital inclusion can support wider policy outcomes" (clearly not written by the Plain English Campaign);  or even "Knocking down the Towers of SIAM" (I thought it had been renamed Thailand years ago, and just why are we knocking their towers down anyhow?!)

I suspected it was just me being older and crotchetier than usual, not liking change and new looks and all that, but it seems I am not alone in my scorn for the new setup. The Register (whose strapline reads, "Biting the hand that feeds IT") also seems to think it's not fit for use... and they have been gathering interesting evidence that all did not go according to plan!  If you'd rather read something consdierably more interesting than a gov.uk blog why not make yourself a cuppa, grab a biscuit, and read the nightmare story of how not to create a government website! http://www.theregister.co.uk/2015/02/18/the_inside_story_of_govuk/?page=1

Why MPs should care about the impact of the new EU VAT rules

Short answer: because 2015 is an election year!

Long answer: We are already being bombarded with candidate flyers, despite being 3 months away from the day, but this made me think about MPs and how (or even if!) they take on board the worries of their constituents, especially if those concerns are at odds with the policies of the MPs political party.

I should say that whenever I have raised an issue with my MP (the LibDem's Tim Farron, Westmorland and Lonsdale ) he has always listened to what I had to say and raised the issue with the relevant dept. or minister on my behalf, so I have no complaints there. It was more an idle wondering, in the wake of the template letters in response to constituents writing to MPs about the EU VAT issue I wrote about yesterday,  as to whether MPs as a whole have really thought about the effect the new EU VAT rules are having, and what this means in terms of the social impact on the country.

Don't get me wrong, I am not saying that Britain will come to its knees because small businesses and sole traders have to register for VAT. What I am saying is that there are a lot of people who make a small but adequate income from doing what they do, whether it be selling mp3's of their music, downloadable ebooks, online magazines, creating apps for phones, writing software, doing a bit of website hosting or selling advert space on one to help defray the cost of their own website, licencing photos or graphics for use by others, or even creating patterns for crafters. Those folks may be full-time students earning a bit to help them through uni, they may be parents with young children to look after, they may be carers for elderly or disabled family members, they may be retired and doing something which helps out with the pension, or simply be using their skills to create a product that will never have a big demand but which fills a small niche market.

For whatever reason they are selling digital goods and services online, they are earning a small income, and for many of them that income may be the difference between not claiming benefits and being forced to do so to get by. 

So, if small digital product sellers are being forced out of business by the lack of a sensible threshold for cross-border sales, the country loses out. It loses people who are working and earning, and instead gains people who need to claim financial support benefits. Surely that cannot be a good thing for the UK?  The cost to the country of a population on benefits is surely much greater than the revenue that  would be lost by allowing a sensible cross-border sales threshold for VAT.

Over the past decade or so there has been a lot of encouragement for individuals to start their own businesses. We are told that the digital economy is growing. More and more shopping is being done online. A whole raft of public services are online. We have been encouraged to get online and do all sorts of stuff, and as a country we have done just that, with 89.90% of us with internet access. The latest figures from the Office of National Statistics (.pdf, 482kb) state that there are 4.6 million self-employed and sole traders in the UK. If even 10% of them are selling digital products (and the bottom line is, we simply don't know how many are yet!) that means almost half a million traders are affected by these awful, unworkable new rules. .

So we now have a whole sector of the business population who are being walloped by the EU or put out of business for doing just what our government has encouraged us to do. It's just plain wrong!.

Further reading: Heather Burns writes about web design law, strategy, and what matters to the profession https://idea15.wordpress.com/2014/11/24/how-vatmoss-is-the-end-of-small-enterprise-in-britain-and-how-we-can-change-it/

How level is a level playing field? Internet giants v. sole traders

One of the things I have noticed during the last few weeks, from the number of people who have written to their MP raising the issue of the new EU VAT rules on cross-border digital product sales, is that all seem to be getting a pretty much standard template letter back. The letter states that the changes are good for the UK and will help provide a level playing field for businesses within Europe.

That, you might think, is a GOOD THING, and I'd agree, except that it isn't true!  Let me put it another way: "How does a sole trader whose cross-border sales may total a few hundred pounds a year effectively compete with an internet giant?"

Let me explain...   

Sole trader: 
Before the change... works from home, does accounts on own computer using spreadsheet software and files an annual self employed tax return. Has a website built using either an open source or a commercial install-it-yourself website/shopping cart and uses PayPal as a payment handler. Dead simple, easy to manage.

After the change... works from home, does accounts on own computer using spreadsheet software and files an annual self employed tax return. Has a website built using either an open source or a commercial install-it-yourself website/shopping cart and uses PayPal as a payment handler.Has had to register for VAT MOSS to account for VAT on cross-border sales. Has had to figure out if his/her existing website/shopping cart software can handle the new requirements of determining which country a potential buyer is from by producing 2 pieces of evidence from the list of those acceptable and displaying the price including the relevant VAT rate for the potential buyer's country, and then input all the details required to show 75 different rates of VAT covering the 28 countries of the EU, and then keep all the transaction data safe for a minimum 10 years from the date of sale.  Not so easy now is it?

Internet giant: 
Before the change... employs a whole army of people to provide a 3rd party marketplace sales platform, employs accountants and tax advisors to ensure they are using the system to their best advantage and are compliant with the requirements. Has the financial resources to provide a complex system for establishing the location of the buyer, calculating and charging VAT on sales based on that location, and to handle all the accounting for and payment of said VAT to each EU country afterwards. Has the resources to ensure the safe and secure retention of the sales data for the required minimum of 10 years.

After the change...  employs a whole army of people to provide a 3rd party marketplace sales platform, employs accountants and tax advisors to ensure they are using the system to their best advantage and are compliant with the requirements. Has the financial resources to provide a complex system for establishing the location of the buyer, calculating and charging VAT on sales based on that location, and to handle all the accounting for and payment of said VAT to each EU country afterwards. Has the resources to ensure the safe and secure retention of the sales data for the required minimum of 10 years. Did you see any difference?

How is that a level playing field???

Small digital businesses asking for your help!

The online petition is asking for the suspension of the new EU VAT rules that are killing small digital businesses. Often these are stay-at-home mums earning small sums online, or youngsters just setting out into the world of app and software and game design, or indie musicians and authors who are just trying to earn some money from what they do without having to get involved with big corps. and agents who cream off much of the profit and pay a pittanace to the artist or author.  Please will you sign it and share on?

Petitioning Commissioner for Economic and Financial Affairs, Taxation and Customs PIERRE MOSCOVICI: https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders

A letter from HMRC in the post today...

A rattle of the letterbox and a long brown envelope dropped onto the doormat. Hubbie picked it up and plonked it on my desk, face up. Bold black capitals on the front pronounced it PRIVATE.

 "It looks official!" I thought, wondering if it was a ticking off for publicly telling HMRC that I don't like the new EU VATMOSS scheme or a letter to say that the HMRC mainframe had eaten my Tax Return and adjudged I owed them £3m in unpaid tax!

Turning it over I saw it was from the NI Contributions Office at Newcastle upon Tyne, and was amused to read to notice printed on the back of the envelope, "HMRC changed banks in April 2009. The old accounts will be closing in 2010. To check you are using the correct account go to www.hmrc.gov.uk/bankaccounts."  

Just for the heck of it, I typed the URL into Firefox and went to have a look. It seems the page has moved, but there is an auto-redirect, which is nice. It now goes to https://www.gov.uk/dealing-with-hmrc/paying-hmrc, where you can find a page called Paying HMRC - with a handy dandy list of links to all the sorts of things you might want (or not want!) to pay them for.  Neat huh?

Anyhow, giggling over the fact that it's now 2015 and the message related to something back in 2009 - 2010 - yes, I know I should appreciate the fact that they are still using up old envelope stock and had not just binned the lot once 2010 had come and gone - I thought that I had better read the letter inside it.

"Probably telling me that NI rates are going up in April," I surmised, but no, I was wrong! The letter, which incidentally was dated 12th December 2014 (is the post really so slow these days?!) stated, "Plans to simplify the way you pay Class 2 National Insurance contributions."

My heart sank! In my experience anything that claims to simplify things usually ends up making it more complicated.  As Woodie Guthrie said, "Any fool can make something complicated. It takes a genius to make it simple.”  I'm not sure how many geniuses there are working for HMRC, but I must say that I cannot see how the new scheme will make things simpler for me!

Currently I pay Class 2 National Insurance contributions by a monthly Direct Debit. I'm self employed and my income varies depending on what work I am doing and when. The current DD takes £11 and £13.75 alternately. The letter tells me it will cease after the July 2015 payment.  After that I will be expected to pay my Class 2 contributions along with any Income Tax and Class 4 contributions. My variable income can handle a small DD each month quite well, but if I have to pay a lump sum once per year then it means I have to remember to put extra money aside for that. I presume it also means I would be fined by HMRC if I was late paying it, as late Income Tax payers currently are.

Feeling very fed up about the change, which has come hard on the heels of last month's EU VAT changes for cross-border sales which scuppered for the time-being a whole set of new digital products planned for this year, I read on.

The letter says, "If your Self Assessment payments are up to date, and you would prefer to spread the cost of your tax and National Insurance contributions, there will be an option to set up a Budget Payment Plan. We will provide more details on how to do this close to the time."

So, if I can set up a budget plan (presumably with monthly payments) why can't I just carry on paying by monthly DD as I do now???

Given that the letter I have been sent was dated 12th December 2014 and reached me on 14th February 2015, I don't expect to hear from them again about the Budget Plan until the middle of 2016!

Is the EU helping or hindering digital companies in Europe?

I have been reading with interest the blog by the EU Vice President, Andrus Ansip, whose aim is stated as "Helping our dynamic digital companies to make the best of Europe" and who seems to be in charge of bringing to fruition the EU dream of the Digital Single Market. To be fair, I quite like the idea of a Digital Single Market too, and I should so love to be a part of it but, alas, I cannot be. 

"Why not?" I hear you ask... my reply is, Red Tape.  

Now Mr Ansip...  (a worrying thought: should I call him Mr, or does he have another title?) ... Mr Ansip has stated that he wants to see Red Tape reduced. That's nice, isn't it? Thank you Mr Ansip, I should like less Red Tape too: it's all about letting businesses get on with doing their biz,  without getting tied up in miles (or as we're talking Europe, kilometres) of the pesky stuff.  Anyhow, he said,  "We should help by cutting red tape for entrepreneurs and smaller companies when they are trying to innovate, with easier set-up, registration and cross-border business rules."

Doesn't that sound good?  I'm all in favour of making it easier for smaller businesses like mine to get going, and sell outside the UK.  I'd love to do it. I want to be an entrepreneur. I'm even trying to learn enough words in other European languages to be able to at least communicate in writing with potential buyers, even if I do have to fall back on Google Translate for the tricky bits!

But I have a problem...  and it's that horrid Red Tape! Specifically, it's that the EU's newly introduced (1st Jan 2015)  VAT rules on electronically supplied cross-border sales are unworkable for me. My shopping cart software can't handle the requirements of multiple prices based on finding out where the potential client is. It can't handle the complexities of zones within countries which have variant VAT rates.  It can't handle establishing the evidence of where the potential buyer actually is before they buy!  It's a simple shopping cart using PayPal as its payment handler, I don't see or retain the buyer's financial details, I don't have their address, I shouldn't even need their real name! My buyer expects to come along, give me an email address, make a PayPal payment, download the product and off they go. Simple! 

Not any more it isn't... now my poor potential buyer is faced with the internet equivalent of the Spanish Inquisition (sorry Spain, nothing personal, I love you really!)  My buyer is made to feel s/he is doing something wrong simply by trying to buy something electronically from me!  The sort of questions the cart is supposed to find the answers to are these...

• Who are you?
• Where do you live? [evidence]
• What's the IP address of your computer / laptop / tablet / smartphone? [evidence]
• What are your bank details? [evidence]
• What country is your phone SIM from? (if using a mobile phone for a purchase) [evidence]
• What is the phone number you are connecting to the internet from?  [evidence]

Having to obtain that information is such a worry. Does anyone else see a problem with this?  

• How about privacy of the buyer? 
• How about data security? 
• How about identity theft?

Europe has some pretty strong data protection laws which are meant to protect our privacy, yet here we are, expected to ride the proverbial coach and horses through those laws to charge EU VAT. It seems to me that the EU left hand has no clue what the EU right hand is doing!

Anyhow, back to that Red Tape, which nice Mr Ansip doesn't like and is trying to save me from,  it now seems to be trying to loop itself around my ankles, tie my knees together, then snake itself all round my body and tie my arms to my sides, until it gets to my neck where it is threatening to pull itself into a very tight knot! 

If like me, you feel that the EU's actions seem to be at odds with its intentions, please would you tell that nice Mr Ansip?  His blog accepts comments, I've left mine (it's awaiting moderation) but I have faith that it will appear soon.  The more of us who point out that we have problems the better the chance of getting some help and changes from the EU. Preferably before that Red Tape kills me, and others like me, off completely!  Here's the link to make it easy to comment: https://ec.europa.eu/commission/2014-2019/ansip/blog/talent-drive-innovation-making-most-europes-tech-startup-potential_en

Help Us Alert the OECD to the EU Digital VAT Catastrophe

I'm sharing the information below which I received from EU VAT Action Campaign's Juliet McKenna (with their consent) in the hope that readers will help alert the OECD to the EU VAT disaster which is hurting and even killing small digital businesses. Please help if you can and share this post on.

Alert the OECD to the EU Digital VAT Catastrophe

The Organisation for Economic Co-operation and Development (OECD) promotes policies to improve economic and social well-being around the world. It provides a forum for governments to work together and share experiences and seek solutions to common problems arising from economic, social and environmental change. They also look at issues like how much people pay in taxes and how this affects business.

At the moment, they are looking at international VAT/GST guidelines on place of taxation for business-to-consumer supplies of services and intangibles. That’s ‘Value Added Tax’ or ‘Goods and Services Tax’ depending on where you live, equivalent to US sales taxes added at the time of purchase. Intangibles means digital products and services.

This is a hugely important opportunity for everyone to voice concerns over the ways in which start-ups and small businesses are being wrecked by the new EU regulations on VAT payable on cross-border digital sales.

It is particularly significant for those in OECD member countries outside the EU such as the United States, Australia, Canada and New Zealand. This is the best way to make your voice heard on this matter.

Getting as many responses as possible is vital. These regulations have been devised with the biggest companies in mind. The OECD needs to know the destructive consequences for smaller enterprises and the damage that will do to grassroots economies around the world.

There is currently a Discussion Draft for Public Consultation available here.
http://www.oecd.org/ctp/consumption/discussion-draft-oecd-international-vat-gst-guidelines.pdf
 
We need as many people as possible to comment on this document by 20th February 2015.
You need only send two or at most three pages. The more focused your submission is, the better and please use your own words as far as possible. The more individual you make your argument, the more weight it will have.

Having researched previous similar consultations, this is the format we would use:

1. A brief statement of who you are and the reasons for your interest in the implementation of the 2015 EU VAT changes to electronic B2C services.

2. General comments on the problems with EU digital VAT, VATMOSS etc, briefly outlining your key concerns. Keep this section concise, just a couple of lines.

3. Specific issues for you, your business and your particular sector. For each point that you raise, make a direct reference / citation to a specific paragraph in the Discussion Draft (link above). Please cite the paragraph number.

If you find the prospect of searching through that document off-putting, please don’t! We have identified the key reference points for you in the detailed guidelines you can download from HERE as a Word document.

4. Conclusions/Suggestions. If you’re commenting as an individual, you need not include these. If you’re submitting on behalf of a group, you may or may not wish to include the EU VAT Action campaign’s stated aims. It’s entirely up to you.

Please prepare your response and submit it in Word format by e-mail to Piet Battiau, Head of Consumption Taxes Unit, OECD Centre for Tax Policy and Administration at piet.battiau@oecd.org.
Once you have sent your submission, please tweet to let us know and to help encourage other people to do the same. Please spread the word about this opportunity for positive action through your other business and social networks."

Tweets should be addressed to @euvataction and you can join in the campaign by following them here https://twitter.com/euvataction

EU VAT rules are hurting the smallest digital sellers

If you are a small, micro or nano business affected by the changes to the EU VAT system would you please fill in the anonymous survey form which EU VAT Action are using to gather evidence that the system is hurting such small businesses, ready to present to the European Commission soon. http://euvataction.org/take-action-now/complete-the-survey/

I'm not registered for VAT, so why does it matter to me?

The new rules were brought in to prevent the widespread abuse of the VAT system undertaken by huge online sellers, who were able to manipulate their home country to take advantage of the country with the lowest VAT rate. The changes made now mean that VAT is charged on digital products at the rate in force in the buyer's country, not the seller's country.
As a principle it's not a bad one. But, and it is a huge BUT... what has happened, and is continuing to happen, is that the very smallest businesses, whose turnovers under UK's rules are below the domestic VAT threshold of £81,000pa, have suddenly found that if they sell any digital product outside the UK but within the EU, and that even means an item sold for just one penny, they have to register for, charge and account for VAT in the buyer's country.

Now consider the situation...

What is a digital product? The EU has defined them on its website here http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/telecom/index_en.htm and they include telecommunications, broadcasting and electronic services. Hah! you might say, how does that affect me as I write ebooks or sell downloadable knitting patterns or build websites and register domain names... well, guess what? All those things fall under the EU's definition of electronic services and so also are subject to the new EU VAT rules. Did I hear you scream?
Here's a handy list of what HMRC says are covered by the electronically supplied services definition... 

Electronically supplied services

The rule change only applies to ‘e-services’ that are ‘electronically supplied’ and includes things like:

• supplies of images or text, such as photos, screensavers, e-books and other digitised documents eg, pdf files
• supplies of music, films and games, including games of chance and gambling games, and of programmes on demand
• online magazines
• website supply or web hosting services
• distance maintenance of programmes and equipment
• supplies of software and software updates
• advertising space on a website

 Well it gets better, as not only is there no threshold below which your sales outside the UK to other EU countries are exempt, but you have to work out which VAT rate applies for each product in each EU country - and most countries have more than one rate! - and present the price to your potential buyer in their own currency with the VAT included before they commit to buy. That's something which the majority of shopping cart scripts used by small online businesses are unable to do. It is too complex code-wise, but even if they could manage the coding there is still the issue of the amount of server processing power needed to make complex queries, and those sellers on shared hosting platforms will find that their webspaces will not be able to handle those processes.

But back to the VAT itself...

Hah! I hear you cry, I bet there is a list of VAT rates somewhere. And you would be right... there is a list, and it changes as EU countries make changes, and you have to keep up with those changes and make sure that your sales page reflects the correct rate in force at the time your potential buyer visits. But first of all you have to figure out which country your potential buyer is in... now how will you do that? Did I hear you suggest using an IP address? Yes, it is one of the things the EU says you can use as your evidence of location... oh, did I not mention evidence before? The EU requires that you obtain two non-conflicting pieces of evidence to prove the location of your buyer, but the HMRC has provided a handy list so you can see what you can use as evidence.

Examples of the type of supporting evidence that tax authorities will accept include:

• the billing address of the customer
• the Internet Protocol (IP) address of the device used by the customer
• customer’s bank details
• the country code of SIM card used by the customer
• the location of the customer’s fixed land line through which the service is supplied
• other commercially relevant information (for example, product coding information which electronically links the sale to a particular jurisdiction)

So, for a digital service where your potential buyer has, in the past, just given you an email address and you or your payment processor has taken their card details, you now have to extract any 2 of the above bits of info from them - information which many people are loath to share online for fear of fraud, identity theft, or just plain desire for some privacy! But you MUST obtain at least two items from the list, and what's more, keep that evidence in a safe place for at least 10 years. Yes, you read that right - 10 years!

So you still want to sell digitally online...?

OK, so assuming you have a shopping cart, and can obtain the necessary evidence of buyer's location, what next? How do you actually pay the VAT you have collected? Well, you could register in each of the 28 member countries of the EU, and complete a return for your sales in each country... or you could send a silent thank you to the HMRC who have set up a VAT MOSS (one stop shop) where you can submit all your VAT returns for every country in the EU via them and they will disburse it for you. Do note though that you still have to work out which amount is payable to which country yourself, all MOSS does is save you that hassle of separate returns and payments.

My head hurts, is there not an easier way?

In a word, no, or maybe yes. Under the EU rules a business is not supposed to refuse to supply,or block, sales to buyers in other EU countries, but the EU has confirmed in writing that where a business is seriously disadvantaged by having to sell outside its home country, then the EU will accept that they should not be forced to do so. But that does mean that any sales we used to benefit from outside our home countries will be lost to us. In many cases they are only small amounts, but for a very small, micro or nano business every sale could be the difference between staying in business and closing down.

This is just a European problem that doesn't affect the rest of the world, right?

Wrong! Sorry but if you are a small business outside the EU you are still affected, as you are now expected to charge EU buyers VAT on your sale and remit that to the EU country involved too - yes that means you folks in the USA, Canada, Australia, India, Africa, and even little green men from Mars if there are any!

So what can we do...?

Firstly, if you are affected by the new rules please do fill in the survey at the top of this post. Here's the link again to save you scrolling back up the page: http://euvataction.org/take-action-now/complete-the-survey/

Every bit of evidence we get about how these changes are hurting is important - not just for us here in the UK, but for sellers across the whole of the European Union, and those sellers outside Europe who want to be able to continue to sell to us Euro-folks. Our money is good anywhere, we're just sorry the new EU VAT system sucks!

Secondly, sign the petition on change.org calling for the immediate suspension by the EU of the new rules for micros-businesses and sole traders: https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders

Thirdly, if you are in UK or the EU, please contact your local parliamentary representative, MP or Euro MP and explain why the new EU VAT rules are hurting small businesses. If you are outside the EU you can still raise it with the EU directly, and the more folks who do, the better they will listen. There is some handy help on the campaign website http://euvataction.org/2015/01/21/time-for-an-action-challenge-for-eu-vat-you-might-enjoy-this-one-come-and-join-in/ Ask them to raise the matter urgently, and then tell the campaign what reply you get back. http://euvataction.org/contact-us/

Finally, spread the word. I was shocked to learn of these changes in the middle of January 2015. That's more than a fortnight after they came into force. I'm suspecting that there are a lot of people who still do not know about them. Those folks are at serious risk, as simply not knowing about the rules is no defence under the law, and the VAT-man has powers that would make your eyes water! Even if someone hears about changes to VAT for digital products in the EU they may not realise that they are affected by them, as they may assume the UK domestic VAT threshold still applies. IT DOESN'T! 

Nothing has been sent to sole traders and tiny businesses about the changes. If you are not already VAT registered in the UK the chances are you have not been told by HMRC, and as this is one of the biggest changes to the VAT system since its introduction, that's pretty shabby. Despite the fact that HMRC has the name and address of all UK small traders who complete their annual tax returns, they have been sent nothing about the EU VAT changes, yet letters reminding us to submit our tax returns have been sent out at least twice in the last year. Why did they not pop a flyer in with those letters? I'll let your imagination answer that question. Perhaps if we had known sooner there would have been a big outcry from the thousands affected by the changes. So now we have to deal with what we have - a system which we cannot use for a host of reasons, or the option to close our businesses.

Please help small businesses fight this change. Just raising awareness amongst your friends, colleagues, and groups would be a huge help. I cannot find a dedicated group on LinkedIn which is tackling this, but there are two on Facebook, where so many of the smallest businesses start out. More info is available there, and offers of help and support would be welcome in both groups. Here are the links in case you want to pop along: https://www.facebook.com/groups/DigitalVAT2015 and https://www.facebook.com/groups/euvataction and thank you for sticking with me and reading so far.

The EU VAT digital supplier fiasco

Purely by chance I recently came across a mention of a significant change to the EU VAT rules which apply from 1st Jan 2015, to anyone supplying digital services (as defined by the EU). This includes such services as website building, hosting, digital music downloads, digital patterns, ebooks, apps, computer games, and more, and is, so it claims, just a part of the EU's move towards a Digital Single Market.

You might think that, as a registered self-employed person who pays National Insurance and completes an annual tax return to the HMRC, I should have know of this already.  "But how?" I ask. Not one word have I received from HMRC to advise me that the VAT rules for digital supply across borders was to change this year.  Not one letter or leaflet did I have, not one email did I get, nothing, nada, zilch! But despite this knowledge void I am expected to comply with the new rules should I make such digital sales.

As it happens, I do not currently make them, but I had planned to. Those plans are now scuppered. Ebooks, digital scripts, mp3 music, digital patterns are all scrapped as I cannot legally sell them within the EU but outside the UK without charging VAT at the rate in force in the buyer's country. And I have to prove that I have confirmed that the buyer's country claim is accurate, and have not one, but two, independent pieces of evidence to prove it. And, I have to retain that evidence in a secure location for 10 years, having first registered with the data protection office (and paid their fee) so I can hold the data.  So many hoops to jump through!!!

Now it seems to me that it should not have been beyond the capability of the UK government and HMRC to tell me about the changes, especially as my business is currently below the UK VAT threshold, so I have no need to go poke around on their website looking for info I did not know I needed to know! (You might notice that this info was published there on 29th December, 2014 - just 3 days before it came into force!) They even have a handy-dandy flowchart, so you can see if you need to panic or not!

I have heard that businesses who are VAT registered were told in advance (although I don't know how far in advance), which is interesting, as the change affects all businesses who supply digital products across borders within the EU, not just those whose income is above the UK threshold. In fact for cross-border sales there is no threshold!  If you sell a digital product for a penny you must register for VAT and charge VAT on the sale. How mad is that?!

The EU VAT changes seem to have been in the pipeline for some time, with some EU sources stating that we have had 6 years to prepare for this so we should not be complaining that we are not ready!  The fact is that, although the EU has been discussing this for 6 years, detailed guidance on what it means for businesses was only produced very late in 2014, and that many of us still have not been told of the change by any official body, nor have we had any advice or guidance about it.

The huge change (probably the biggest to the VAT system since it was introduced into the UK)  is having a disproportionate effect on sole traders, nano- and micro-businesses, with many of them not being able to comply so they are ceasing trading, or some are carrying on trading in blissful ignorance that they are trading illegally and could be severely penalised when the VAT folks catch up with them. Larger businesses, and those which are currently VAT registered are probably more able to cope with the changes to the rules, but those of us who have never dealt with VAT are at a serious disadvantage and many simply will not survive the process.

There is a campaign (EU VAT Action) to try and get the situation sorted out before small businesses fold, which would cause untold hardship to many who earn small but vital incomes from such businesses. There are also two groups on Facebook - one public (open to view with joining) and one closed (join to read content) - which have lots of information about the changes, how they affect small businesses and where advice may be sought and issued raised. We can also write to our MPs and MEPs expressing concerns, raising individual cases and experiences and adding our voices to the campaign - I am doing this, how about you?

Here be dragons!

I had long wanted to make a crocheted dragon for my son, who adores all things dragon-related. I had looked around and finally decided that the one to tackle would be the Smaug pattern by Heidi Bears which is made by crocheting a large number of shapes based on the African Flower pattern and then connecting them in such a way that they make a dragon body, which is then stuffed with fibrefill to bring it to life!

The pattern calls for sock-weight yarn (4-ply) but I wanted to make a larger dragon, so I went for double knit instead (8-ply) and used a 3.5mm hook, in a fab royal purple teamed with silver-grey with a metallic thread through it.

The finished figure is approximately 120cm (4 feet!) from nose end to tail tip, and stands about 44cm high. It took around 2 months to make, and used approx. 600g of yarn (300g of each colour) plus almost a kilo of fibrefill stuffing.

The effect was just what I wanted, and my son promptly fell in love with the newest addition to his dragon collection!