Suppliers of B2C digital services including telecommunications and e-services such as mobile apps will be able to do their VAT in one place from next January.
HMRC is setting up an optional one-stop online VAT service which will mean that UK businesses supplying digital services across the EU may only need to register and pay for VAT in the UK – instead of in every member state they do business.
Sally Beggs, deputy director for indirect tax at HMRC, said the service – dubbed the VAT Mini One-Stop Shop (MOSS) – essentially targets businesses with their main operation or headquarters in the UK.
"They can register for the online service and then authorise an agent to act on their behalf," Beggs said in a statement issued to press this morning.
HMRC's website explains that current taxation for the supply of MOSS-eligible goods and services is determined by the supplier's location. But from 1 January 2015, the place of taxation will be determined by the location of the consumer.
"This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before," it says in a note on the HMRC website.
Businesses that supply eligible services to both businesses and consumers may use the service, but only as far as their supply to consumers is concerned.
"If your customer does not provide you with a VAT Registration Number (VRN), and you have no other information that suggests that your customer is in business and VAT-registered, you can treat this as a B2C supply," the note says.
Some 27,000 to 42,000 UK businesses are expected to register, most of them SMBs, according to HMRC. Suppliers of broadcasting services, telecommunications, and what HMRC describes as "e-services" will be eligible for MOSS.
E-services might include the B2C digital supply of mobile apps, e-books, streaming multimedia, radio or TV broadcasts, and so on.
"They do not have to pay the tax separately in each country where they do business," according to HMRC's 9 June 2014 statement. Registration for MOSS will open in October, with the service going live in January.
Eligible firms not currently registered for VAT will have to do so to use the new service, HMRC said. Other member states are meant to set up their own system.
Further relevant detail is available in the UK Finance Bill 2014, a bill focusing on taxation changes and originally published on 27 March.
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