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Dividing business in the UK and in the rest of EU into two separate entities will not be seen as revenue splitting when it comes to registering for the VAT mini one-stop shop (MOSS), HMRC have appeared to accept.
Dividing business in the UK and in the rest of EU into two separate entities will not be seen as revenue splitting when it comes to registering for the VAT mini one-stop shop (MOSS), HMRC have appeared to accept.
In a Twitter Q&A on the changes to the VAT place of supply of services rules, which are set to take effect on 1 January, the Revenue confirmed that a firm will have to be signed up for VAT in UK to be able to register for the MOSS.
The department went to say that UK sellers for whom digital sales are a small part of their interests can separate the part that comprises cross-border digital services and voluntarily register it for UK VAT – which will then enable the firm to have access to the MOSS.
When asked if the arrangement was not, in effect, revenue splitting, HMRC replied it was not, because the UK business would still be “below the UK limit. It is not an artificial split to avoid UK VAT registration or paying VAT.”
The Revenue said the situation would be a “normal application of the rules, not a special concession or derogation. It simply recognises digital services businesses will not be seeking to avoid UK VAT or engaging in unfair competition with other UK businesses.”
No detail yet on HOW to do this, and less than a month to implementation! An enormous #consultationfail as a whole stratum of one man (or more often one woman) businesses find out late in the day that they will be affected but that HMRC's stakeholder engagement was seemingly only with VAT registered businesses