Sep 16, 2014
New EU VAT rules hit previously exempt UK businesses.
Major VAT rule changes impacting how tens of thousands of UK e-service providers do business in the EU are less than four months away, yet the majority of those affected are unprepared and may be at risk of heavy non-compliance penalties.
Technology provider Taxamo, who offer software that helps companies navigate and process the new rules, say that e-service businesses, many of whom are small-to-medium sized businesses and were previously small enough to be exempt from UK VAT rules, are ill-equipped to deal with the significant obligations that come with the 2015 rules changes.
“We are highlighting this issue because every day we are taking calls and answering enquires from businesses who are confused by the new rule changes and don’t understand what they need to do to comply,” said John McCarthy, CEO of Taxamo.
HMRC has estimated that some 42,000 UK-based online businesses will be affected by the new rules and a sizable portion of these will be small-to-medium sized businesses, many of whom don’t currently have to register to pay VAT in the UK.
However, as there is no minimum threshold applied to the new rules, and given that the existing VAT registration threshold in the UK is £81,000, thousands of small businesses will now be brought into the VAT net.
Recognising the need for additional information for businesses, Taxamo are working closely with HMRC to continue to make e-businesses aware of the new rules. Marking the 100 day countdown to the adoption of the new rules, on Tuesday, September 23, Taxamo will host an interactive panel event aimed at giving businesses practical information on what the new rules mean for them, and how they can prepare. The event, which will be streamed live from Barclays Accelerator in London, will give businesses the opportunity to get first-hand information on the rules, with the option of asking questions to the expert panel.
Information on the event can be found here: http://taxamo100daycountdown.eventbrite.com/?aff=PR.
The new EU VAT rules require businesses to identify where their end customer is located by collecting ￼two pieces of non-conflicting evidence and then applying the correct VAT rate. There are additional compliance obligations around reporting VAT receipts, storing information on VAT transactions for ten years and ensuring compliance with the various VAT regimes across the EU. E-service businesses who ￼do not comply with the new rules are liable for penalty in the jurisdiction of the Member State in which they have infringed on VAT laws.
“The sad part here is that even if a merchant is unaware of the changes, through no fault of their own, it will be them that will suffer. As a small e-service company ourselves, we empathise with the challenge facing businesses and want to do our part to increase awareness,” McCarthy said.
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