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Non-EU Software companies not charging VAT

Non EU Software companies not charging VAT to UK private customers

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Not question as such but merely an observation.

I have come across several Non EU Companies some quite large that are selling online business software in the UK both B2B and B2C and cannot see any evidence that for B2C that VAT is actually charged.  All they require from me is uusually an email address and credit card details. Neither do they request a VAT number from myself.  I would assume some of these reputable companies would have taken advice before selling digital services to the EU and register under VAT MOSS.

For B2C the place of supply is where the customer is based and there is no threshold I believe even it there was surely some of these companies are doing very well in the UK.

These companies do not have a business or fixed establishment in the UK and sales and technical teams are in the US.  They charge UK Customers in USD -  not sure why they cannot charge in GBP instead.

If HMRC ever catch up with them (which I doubt unless someone grasses on them) then paying back VAT going back several years may prove very expensive as well as excessive penalities.  

 

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By Samantha20
20th Dec 2017 12:44

Yes, there was a Panorama about this a few weeks ago although they were dealing mainly with traders on Amazon and Ebay.

Apart from the obvious loss of VAT to the Exchequer, the worst part is that they are putting legal UK traders out of business because they can undercut them by 20%.

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By Jim100
20th Dec 2017 15:09

Yes I saw a few articles in the Sunday Times as well

I also think many traders do not declare the true value of goods when it goes past customs hence again making a VAT/Duty saving. These traders would have to pay 20% VAT on import to the UK

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By Samantha20
20th Dec 2017 15:14

Jim100 wrote:

Yes I saw a few articles in the Sunday Times as well

I also think many traders do not declare the true value of goods when it goes past customs hence again making a VAT/Duty saving. These traders would have to pay 20% VAT on import to the UK

Yes, but they would be able to reclaim import VAT if they were registered. The real issue is them not charging VAT on their sales and so undercuting UK traders. They said in the budget that they were going to make Amazon, Ebay etc liable for the VAT in their Markplace traders did not comply but not for few years. They have known about this for years and have done absolutely nothing as usual.

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Replying to Jim100:
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By Samantha20
20th Dec 2017 15:15

Jim100 wrote:

Yes I saw a few articles in the Sunday Times as well

I also think many traders do not declare the true value of goods when it goes past customs hence again making a VAT/Duty saving. These traders would have to pay 20% VAT on import to the UK

Yes, but they would be able to reclaim the import VAT if they were registered. The real issue is them not charging VAT on their sales and so undercuting UK traders. They said in the budget that they were going to make Amazon, Ebay etc liable for the VAT in their Markplace traders did not comply but not for few years. They have known about this for years and have done absolutely nothing as usual.

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By Jim100
20th Dec 2017 15:37

I think HMRC are using this website now to tackle the problem

http://www.vatfraud.org/

For selling software online I imagine most companies have assumed that their customer is a business which maybe true for the majority. Though you think they would want to keep proper records - just in case.

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