New VAT rules to cripple UK digital sales

hmrcRegulations to be introduced on the 1st of January 2015 mean that small UK businesses supplying digital services to EU countries will face an administrative nightmare.

If a UK company supplies digital services of any kind to the EU, it will be forced to either register for VAT in each EU country it trades with or use HMRC’s VAT mini one stop shop.

Digital services include broadcasting, telecomms, or services including video on demand, applications, eb00ks, gaming, AV software and online auctions.

HMRC administers payments to every one of the EU’s tax authorities.

VAT rates in Europe vary widely and HMRC also warns that the list of digital services it provides is far from exhaustive.

One company creating web pages for EU customers described the changes as ludicrous.  He told TechEye that rather than signing up to either the HMRC service or registering for VAT in the countries he trades with, he has told his European customers he simply isn’t going to supply them anymore.