I run an online website, which provides a B2C subscription service (statistical information and online tools for research). For the past few years the business has traded under the VAT threshold but it is likely to go above it in the next 3 months. I would like it to continue to stay under the threshold.
Thresholds
Q1. The current threshold is £83,000. I appreciate there is no crystal ball but is it likely that next year this could increase by more than the usual £1,000? e.g. in most years it increases by a small amount and then a few years later it increases by many thousands. Presumably this is to catch up from changes in inflation, or due to timing of elections?
Q2. If the threshold is exceeded at the end of February (say £83,500 for the 12 month period from March 2016 to February 2017), but the Budget increases the threshold to £84,000 from 31st March 2017 is there a requirement to register?
Q3. Is it perfectly valid to close the shop doors in order to not go over the threshold? e.g. If on 28th February sales are on £82,900 could customers be told to 'sorry we are closed, please come back 1st March'
EU VAT - Non Digital Services
IMO this business does not qualify as a digital service and thus does not need to comply with EU VAT / VATMOSS. This is based on the advice I was given and information gleaned from two years ago. I appreciate some may wish to poke this with a stick but for now please assume that the current EU VAT for digital services does not apply.
Q4. Assuming we did register for VAT (as a non digital service). What is the position for sales to customers in EU countries. How is it accounted for and how is VAT rates applied? I understand that for Digital Services there are different rates, and that VATMOSS would be useful for distribution but what about non digital services.
e.g. ACME Handbags sells handbags for £10 in the UK If ACME was then VAT registered they would sell for £10+20%VAT in the UK and pay the appropriate VAT to HMRC each quarter. What if there were sales to Greece, Spain, Denmark, Holland? Is it still charge all customers £10+20% VAT and pay HMRC the appropriate net?
EU VAT - Eventually All Businesses
Q6. The EU VAT for Digital Services model will eventually be rolled out to all businesses, correct?
Q7. Pierre Moscovici latest proposal states that there will be a cross border sales threshold of €10k. Is this per country or total?
e.g. ACME Handbags sell £5000 worth of handbags to France, £5000 to Ireland, £2000 to Italy. Total €14,000 but no more than €6000 to any one other EU country.
Replies (4)
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Q1. This is the official line on increasing the VAT threshold
https://www.gov.uk/government/publications/vat-revalorisation-of-registr...
Q3. Closing down for a period to avoid VAT registration is a possible option. Remember the VAT threshold is calculated on a 12 month rolling figure you need to do some sums to work out how long you need to close down. You should also consider the consequences of customers not returning after closedown.
You would need to check again coming up to the end of the next month that £83,000 isn't going to be reached in that 12 month period. It isn't a once a year check.