In this month's episode of TAXtv Neil Warren covers the most recent news in VAT including explaining the latest European VAT problems.
Warren tells Giles Mooney what businesses need to know about new European Union MOSS rules on VAT for the sales of digital services to the EU and “distance selling” rules for products sold to the EU.
According to the VAT expert the distinction between business and non-business sales can be a “grey area”.
Also, it’s not always clear when the VAT MOSS rules (requiring businesses to charge customers VAT at the rate of the country where the customer buys the service from, rather than where the supplier is under the previous rules) apply, Warren said.
“A lot of people still charging UK VAT on sales into Europe may be arguing that it doesn't fall into MOSS as the transaction needs human intervention.”
UK businesses also need to understand changes to VAT rules on the distance selling of products (requiring UK businesses to selling to a consumer in a EU country to charge the VAT of that country, but only above certain financial thresholds) Warren added.
“Businesses in the UK are getting caught out by overseas tax authorities,” he said.
Rival overseas businesses are reporting UK businesses to the tax authorities if they’re suspected of failing to comply with the distance-selling tax rules, Warren said.