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Indirect Tax Update for week ending 24 October 2014
With just over 2 months to go before one of the biggest changes to the EU VAT rules, HMRC has finally opened its electronic portal. Businesses involved with the supply of telecommunications, broadcasting and other digital services can now apply for registration under the UK's Mini One-stop-shop (MOSS) regime.
The EU VAT system is changing dramatically on 1 January 2015. Businesses which provide telecommunication, broadcasting and electronic services (TBES services) to private individuals in Member States other than their own will, from that date, be required to charge and account for VAT in the Member State where the customer is established. This accounting can be done in one of two ways. Firstly, the business can register for VAT in each of the Member States where TBES services are supplied. For large businesses with supplies in all Member States, this would require an additional 27 VAT registrations with all of the administrative and logistical hassle that follows.
To resolve this administrative problem, EU Member States are required to establish a MOSS portal where businesses can register in a single Member State. On 20 October 2014, HMRC opened its UK portal and UK businesses can now register under the UK's MOSS scheme.
Affected businesses can now register for MOSS using HMRC's online services. HMRC's guidance note confirms that businesses which register under the MOSS scheme must make quarterly returns covering the periods ending March, June, September and December each year by the 20th day of the following month. Any payments that are due must also be settled at the same time. However, HMRC is due to provide further details about discharging any liability due under MOSS towards the end of 2014.
HMRC's guidance also confirms that, as far as record keeping requirements are concerned, affected businesses will need to keep MOSS records for a period of ten years and, in particular, must keep evidence to prove where the 'place of supply' is. In other words, HMRC will expect businesses to have gone through a process of determining where their customers belong for the purpose of TBES supplies and to be able to point to physical evidence to support the conclusions reached.
Comment – With only 70 or so days to go, affected businesses should be taking urgent steps to register under the MOSS scheme. Any business that does not register under MOSS will be expected to account for VAT in their customer's Member State which will equally require urgent action to ensure that VAT registrations are in place where appropriate throughout the EU.
For further information in relation to any of the issues highlighted in this Indirect Tax Update please contact:
London/South East Karen Robb [email protected]
The Regions Stuart Brodie [email protected]
The Midlands Mike Sheppard [email protected]
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Indirect Tax Update 39/2014
