Help for digital businesses

19 January 2016

Issue: 4534 / Categories: News , VAT

HMRC Brief on providing digital services to consumers in other EU member states.

Revenue and Customs Brief 4/2016 outlines two new options available to businesses that make supplies of digital services to consumers in other EU member states but trade below the UK’s VAT registration threshold (£82 000 for 2015/16) .

The first concerns the customer’s location. For all other supplies of digital services the normal rule is that businesses must collect two pieces of non-contradictory information as evidence of the location. HMRC recognised that some small businesses have found this difficult and will allow businesses below the UK VAT registration threshold to exercise their best judgment. As a result businesses can rely on any single piece of information such as the address provided by the customer to determine where their customer is located.

Second the taxpayer should consider if it is in business and therefore within the scope of the changes (see HMRC’s VAT Business/Non-Business Manual for guidance)....

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