NIC avoidance, Late filing penalties, VAT MOSS TAN/newsletters

Tax was in the news again last week for all the wrong reasons: the BBC uncovered a blatant NIC avoidance scheme, and The Telegraph newspaper published a leaked HMRC memo concerning late filing penalties. We explain how both these issues could affect you and your clients. We also have news of developments relating to the operation of VAT MOSS.

VAT MOSS
New rules for applying local rates of VAT to digital services supplied across EU borders came into effect on 1 January 2015, but guidance on how to account for the VAT due under VAT-MOSS was released very late. A concession for UK traders who aren't VAT registered, to allow them to use VAT-MOSS without having to charge VAT to their UK-based customers, was issued almost at the last minute.
 
A second concession concerns the records required to determine where the customer is based. Small businesses are allowed to rely on the customer location information provided by their payment service provider (eg PayPal). This concession was announced as a temporary measure to apply to 30 June 2015, but it is now permanent for UK businesses who are not VAT registered.
 
The role of the tax agent in helping clients to comply with VAT-MOSS appears to have been added as an after-thought in the design of that system. As a tax agent you can't register your clients for VAT-MOSS, but you can submit VAT-MOSS returns on their behalf if you register as a VAT-MOSS agent. Details of how agents can register were published on the GOV.UK website on 21 May 2015. The first deadline for submitting a VAT-MOSS return was 20 April 2015.
 
If your clients are providing digital services they are likely to be invoicing electronically as well. Take a look at the new guidance on electronic invoicing in VAT Notice 700/63.
 
Finally for clients who are disgruntled about the VAT-MOSS regime, there may be light at the end of the tunnel. The EC has acknowledged in a report on the digital single market the administrative burden that VAT imposes, and has recommended there should be a common EU-wide VAT threshold to help small e-commerce businesses. 

This is an extract from our tax tips newsletter dated 4 June 2015. The newsletter itself contained links to related source material for this story and the other two topical, timely and commercial tax tips. It's clearly written and extremely good value for accountants in general practice. Try it for free by registering here>>>