We need an Emergency Interim EU VAT Suspension from UK Gov't!

At last week's EU meetings it was made very clear that there would be no immediate help coming from the EU for low-turnover businesses being hit by the new EU VAT rules on cross-border digital sales.

Despite accepting that there has been unfortunate and unforeseen consequences for low-turnover businesses, and that something needs to be done to put things right, the EU mandarins have said it is not going to be considered until the end of the Summer, 2015, at the soonest, and no action will be forthcoming until 2016 at the very earliest.

FOR MANY BUSINESSES THAT IS SIMPLY TOO LATE!

Already businesses are struggling and failing to comply with the evidence requirements for cross-border sales. Add another year to the mix and many more will have closed their doors or stopped digital sales totally.

We have been told that there is something that the UK government can do to help, but we need YOUR help to make it happen.

It is called an Emergency Interim EU VAT Suspension, which basically means the UK government agree to suspend the new rules until such a time that the EU gets its act in order and provides a permanent fix for the mess it has made for micro-businesses.

What we need is for everyone to write to their own MP - you can use this site https://www.writetothem.com/ to contact them by email if it is easier than emailing them directly - and ask your MP to demand an Emergency Interim EU VAT Suspension on behalf of the thousands of small UK businesses that are suffering under this scheme.

Also, if you are a member of a Trade Association, please ask that they lobby the government for the same suspension. The EU VAT Action campaign has this to say about who to lobby and how,

If you are a member of any kind of trade of business association, please write to their Chair today to ask them to support the call for an immediate interim ESC to remove the burden of these rules from micro businesses. Please ask them to contact:

• PM David Cameron
• David Gauke (Financial Secretary to the Treasury, who would have to propose this legislation)
• and Jim Harra (HMRC Director General of Business Tax, who would need to propose this to David Gauke).

Please copy your request to your MP and ask them also to lobby David Cameron, David Gauke and Jim Harra.

Please also ask your industry body to contact any colleagues they have in other industry organisations and trade bodies, to urge them to do the same.

The more people who raise the issue with their MPs the better the chance we have of getting the Emergency Interim EU VAT Suspension, so please do this and help the thousands of us who are struggling to comply with the unintended consequences of this unfortunate EU legislation.

More details can also be found on the EU VAT Action website here .

EU VAT action is STILL on our menus!

The EU VAT issue for digital small/micro/nano businesses has not gone away.  Juliet McKenna explains why 3rd party marketplaces are not the answer and why low turnover businesses need the support of a sensible cross-border VAT threshhold, to allow them to survive and grow, and compete with the big-boys on a level playing field,

http://euvataction.org/2015/05/13/eu-vat-and-third-party-marketplace-myths/

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?