Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.

Call us on 0121 233 0090

  • OUR APPROACH
  • ABOUT YOUR BUSINESS
  • REQUEST A CALLBACK
  • BUDGET
  • CONTACT US
GDPR Guide Brexit Covid-19

Want to pay less tax?

Sign up to our monthly tax saving newsletter delivered directly to your inbox to find out how.

Simplification of VAT MOSS for small businesses

Newsletter issue - February 2016.

HMRC Brief 4/2016 entitled VAT MOSS - simplifications for businesses trading below the VAT registration threshold, outlines simplifications available to businesses trading below the UK's VAT registration threshold (currently £82,000) that make supplies of digital services (telecommunications, broadcasting or electronically supplied services) to consumers in other EU member states. Some simplifications are already in place and Brief 4/2016 announces two new areas of help for the smallest businesses.

Businesses need to determine where their customer is located. There are specific rules in place for certain types of transactions (see the gov.uk website here for further details). For all other supplies of digital services, the normal rule is that businesses must collect two pieces of non-contradictory information to evidence their customer's location.

HMRC have previously allowed UK businesses that are below the UK VAT registration threshold and registered for VAT MOSS, to base their customer location decisions on a single piece of information provided to them by their payment service provider. HMRC introduced this simplification in response to feedback from small businesses that said that they found it difficult to obtain two pieces of evidence. However, in the latest guidance, HMRC say that they recognise that some small businesses have still found this difficult. Consequently, they have now said that they will allow businesses below the UK VAT registration threshold to 'exercise their best judgement'. This means businesses can rely on any single piece of information, such as the address provided by the customer, to determine where their customer is located. This additional flexibility should provide additional help for businesses below the UK VAT registration threshold.

Brief 4/2016 can be found on the gov.uk website here.