VAT

1. VAT and cross-
border retailing
A changing landscape

2. Why worry?
 Risk
 Financial
 Reputational
 Cost
 Potential loss of margin
 Retrospective liabilities
 Time
 Not adding value to your business
 “Hindsight is a wonderful thing”

3. Putting it in context
 +100 countries…and growing
 Varying complexity (compare UK to (eg)
NZ)
 Huge variation in rates (0% -> 27%)
 Constantly moving goalposts
 A true “single market”?

4. Trigger points
 Goods or services?
 How do goods move? (Drop ship? Call off
stocks? Etc)
 Supply flow: Direct sales? Via agent?
Reseller?
 Effect of VAT rate on pricing/margin?
 Factor in cost of compliance

5. Cost of non
compliance?

6. UK Retailer selling goods
to non-EU customers
 Scope for zero-rating
 Must be exported to a place outside EU
 Proof of export essential:
 Official
 Commercial
 Scope for monthly returns?
 Obligations in destination country?

7. UK Retailer selling goods
to customers in other EUMS
 B2B or B2C?
 B2C
 ‘Default’ position -> UK VAT applies
 Beware Distance Selling rules (£35k ‘warning
light’)

8. UK Retailer selling digital
services to other EUMS
 B2B or B2C?
 B2C
 From 1 Jan 2015 – must account for VAT in
customer’s EUMS
 Register separately in each country? Or,
 MOSS?

9. What services are affected?
Applies to “broadcasting,
telecommunications and
electronically supplied services”
Where sold B2C to customer in
another EUMS
“Electronically supplied services”
includes:
 Web-hosting
 Distance learning packages
 Music downloads

10. What’s changing?
Pre 1 Jan 2015
UK -> UK: UK standard
rated
UK -> EU: UK standard
rated
UK -> non-EU: Outside
scope
From 1 Jan 2015
UK -> UK: UK standard
rated
UK -> EU: VAT due in
customer’s MS
UK -> non-EU: Outside
scope

11. How do you account for VAT?
Option 1
Register for VAT in
every EUMS where
sales made
Option 2
Register under MOSS

12. MOSS
 Single VAT registration
 Online via HMRC’s website
 Box for each EUMS:
 Account for VAT on sales
 Per country
 At prevailing local rate

13. MOSS Pros and Cons
+
 Administrative ease
 Single online return
 Completed in
English
-
 No turnover limit
 10 year retrospective
audits
 Fixed periods
 No recovery of in-
country costs

14. Practical issues
 Identification of customer location
 HMRC guidance
 Up to 3 pieces of commercial evidence
may be required
 Pricing/margin
 Systems issues

15. Refunds of overseas
VAT
 EU -> 8th Directive
 Process:
 Time limits
 Non-EU
 Limited scope
 Check on country by country basis

16. Checklist
 Ensure transactions are taxed:
 In right place
 At right time
 At right rate
 Ensure systems are VAT-compliant
 Deal with EU statistical obligations
 Retain proof of export/proof of customer
status
 Consider claiming refund of non-UK VAT

17. Contact
details
vat@taxadvicedirect.co.uk