EU Being Stupid?

[spring hall convert]

This has come to my attention via underground musicians no longer wishing to use platforms such as bandcamp to sell their records.

http://www.telegraph.co.uk/technolo...-online-business-with-idiotic-VAT-reform.html

Is there any sense to it?

 

[Westdene Seagull]

I don't think you really need the question mark in the title. Time to leave.

EDIT - and I occasionally sell digital items online and I'm buggered if I'm going to bother charging VAT.

 

[Herr Tubthumper]

Hmmmm. There seems to be a lot of scaremongering in this article. If you're flogging stuff you need to keep accounts regardless. Adding VAT into the mix isn't a big deal as far as I'm aware. I sell my services to the EU from a British company and it's a very easy process indeed..... ironically because of EU simplification. I agree there is an extra, but minor, overhead. The Telegraph suggests if you earn less than £500 a year it isn't worth it but if you're earning this then you're probably doing your accounts yourself so an extra form shouldn't be too taxing (pun intended)? I am currently doing what is being alluded to in this article and my VAT takes me all of 5 minutes tops every 3 months. Am I missing something?

 

[Herr Tubthumper]

I don't think you really need the question mark in the title. Time to leave.

EDIT - and I occasionally sell digital items online and I'm buggered if I'm going to bother charging VAT.

The real difficulty with foreign trading will occur if we left the EU. It will add a lot of time and red tape to my accounting and that of the HMRC.

 

[spring hall convert]

Hmmmm. There seems to be a lot of scaremongering in this article. If you're flogging stuff you need to keep accounts regardless. Adding VAT into the mix isn't a big deal as far as I'm aware. I sell my services to the EU from a British company and it's a very easy process indeed..... ironically because of EU simplification. I agree there is an extra, but minor, overhead. The Telegraph suggests if you earn less than £500 a year it isn't worth it but if you're earning this then you're probably doing your accounts yourself so an extra form shouldn't be too taxing (pun intended)? I am currently doing what is being alluded to in this article and my VAT takes me all of 5 minutes tops every 3 months. Am I missing something?

Possibly - http://www.factmag.com/2014/12/29/bandcamp-sellers-vat-tax-digital-downloads-from-january-2015/

But I'm noticing quite a few small level musicians/ labels withdrawing from bandcamp on Twitter. It seems a bit OTT when these types are nowhere near making a living from what they are doing.

 

[Dick Head]

It just means that people will have to start selling their knitting patterns on the Deep Web with all the drug dealers and professional hitmen.

 

[Dorset Seagull]

The biggest problem with this is having to charge the vat % rate of the purchasers country. In many cases when using something like PayPal to take payment then the seller doesn't have the minimum 2 pieces of evidence required to prove the country of residence of the purchasers. The law is aimed at preventing companies setting up businesses in low vat countries in an effort to be able to undercut competitor prices.

Many micro digital businesses just don't have access to the information required to be able to adhere to the scheme so will fall foul of the law so it is not just as simple as accounting for vat

 

[Herr Tubthumper]

It just means that people will have to start selling their knitting patterns on the Deep Web with all the drug dealers and professional hitmen.

Good point. And you won't need to use codes like "digital download" or "knitting patterns" either.

 

[Herr Tubthumper]

The biggest problem with this is having to charge the vat % rate of the purchasers country. In many cases when using something like PayPal to take payment then the seller doesn't have the minimum 2 pieces of evidence required to prove the country of residence of the purchasers. The law is aimed at preventing companies setting up businesses in low vat countries in an effort to be able to undercut competitor prices.

Many micro digital businesses just don't have access to the information required to be able to adhere to the scheme so will fall foul of the law so it is not just as simple as accounting for vat

PayPal surely must know where the payment comes from? I would have thought this is a basic requirement to prevent laundering and other criminal activity?

 

[Westdene Seagull]

Hmmmm. There seems to be a lot of scaremongering in this article. If you're flogging stuff you need to keep accounts regardless. Adding VAT into the mix isn't a big deal as far as I'm aware. I sell my services to the EU from a British company and it's a very easy process indeed..... ironically because of EU simplification. I agree there is an extra, but minor, overhead. The Telegraph suggests if you earn less than £500 a year it isn't worth it but if you're earning this then you're probably doing your accounts yourself so an extra form shouldn't be too taxing (pun intended)? I am currently doing what is being alluded to in this article and my VAT takes me all of 5 minutes tops every 3 months. Am I missing something?

The main issue for me is that the British parliament - i.e. that voted for the British public and the one answerable to the British public - has deemed £81k a reasonable figure before you have to worry about VAT. The EU - mostly unaccountable to the British public - has decided to overrule this. We should tell them to swivel and ignore the new rules.

The real difficulty with foreign trading will occur if we left the EU. It will add a lot of time and red tape to my accounting and that of the HMRC.

In you opinion given there is no data on what will happen if we leave. Scaremongering to use your word.

 

[Westdene Seagull]

PayPal surely must know where the payment comes from? I would have thought this is a basic requirement to prevent laundering and other criminal activity?

IP addresses are only roughly geographical - use a proxy server and it will cause Paypal no end of difficulties. As usual the EU have issued a dictate without actually thinking it through.

 

[Dorset Seagull]

PayPal surely must know where the payment comes from? I would have thought this is a basic requirement to prevent laundering and other criminal activity?

I don't sell digital content myself but have it on good authority from people that do that this is the main problem. I have read through the details on the petition that has been sent through to Vince Cable and it appears that you do require 2 pieces of info about the buyers address which can be difficult to acquire. Not only that but you obviously then have to tot up all the different vat rates and amounts charged to fill out the vat return. This becomes quite a lot of work for a micro business selling online and many will just not bother in future

 

[Herr Tubthumper]

The main issue for me is that the British parliament - i.e. that voted for the British public and the one answerable to the British public - has deemed £81k a reasonable figure before you have to worry about VAT. The EU - mostly unaccountable to the British public - has decided to overrule this. We should tell them to swivel and ignore the new rules.




In you opinion given there is no data on what will happen if we leave. Scaremongering to use your word.

As I mentioned, I am a small operator in the EU and I know how difficult it will be if the UK left the EU. There are processes in place to make an onerous time consuming task take me 5 mins and I presume the HMRC benefit from these processes as well. Every other trader will be hit the same, or even worse if they trade with multiple EU countries; I just deal with one. Multiply me by every other EU trader and you have your data.

Off for some beer and a curry now. Laters my friend.

 

[Lord Bracknell]

The biggest problem with this is having to charge the vat % rate of the purchasers country. In many cases when using something like PayPal to take payment then the seller doesn't have the minimum 2 pieces of evidence required to prove the country of residence of the purchasers. The law is aimed at preventing companies setting up businesses in low vat countries in an effort to be able to undercut competitor prices.

If I read this correctly, it would seem that the authorities are seeking to ensure a consistency of tax paying and tax collecting that will prevent unscrupulous companies twisting the rules of commerce to their own advantage. That seems wholly fair. Thank goodness for the EU I say. These rules are there to protect the interests of citizen taxpayers.

 

[Westdene Seagull]

As I mentioned, I am a small operator in the EU and I know how difficult it will be if the UK left the EU. There are processes in place to make an onerous time consuming task take me 5 mins and I presume the HMRC benefit from these processes as well. Every other trader will be hit the same, or even worse if they trade with multiple EU countries; I just deal with one. Multiply me by every other EU trader and you have your data.

Off for some beer and a curry now. Laters my friend.

But you've made the assumption that no agreements like Norway or Switzerland have will be agreed. Therefore you nor I have any data.

 

[Westdene Seagull]

If I read this correctly, it would seem that the authorities are seeking to ensure a consistency of tax paying and tax collecting that will prevent unscrupulous companies twisting the rules of commerce to their own advantage. That seems wholly fair. Thank goodness for the EU I say. These rules are there to protect the interests of citizen taxpayers.

Because micro digital businesses avoid tax on such a large scale that it dwarfs the likes of Google and Amazon ??

 

[Husty]

Only on sales of items to people in other countries - in the UK the VAT allowance of £81000 will still be in place.

 

[beorhthelm]

If I read this correctly, it would seem that the authorities are seeking to ensure a consistency of tax paying and tax collecting that will prevent unscrupulous companies twisting the rules of commerce to their own advantage. That seems wholly fair. Thank goodness for the EU I say. These rules are there to protect the interests of citizen taxpayers.

the issue is that theres little to no provision to determine the origin of the purchaser. if you use some sales platform (i.e. Ebay) they can feed information to verify country of origin, but for independent sellers using their own website and a paypal button, they wont have anything - paypal isnt obliged to provide such information. two peices of evidence is particularly onerous when even one will be difficult. IP isnt viable without a third party tools, which means more complicated tools for the simple site to install and manage (and isnt reliable anyway).

it means small sellers have the choice of adopting a platform (with fees), stop selling from private websites, becoming VAT registered for any trading, or carrying on regardless and risk punitive fines when caught. because unlike other nations, our HMRC will go after the little people if its easy enough and this will be easy, they'll just hit you for a tax bill and if you cant prove no sales to the EU, you'll have no defence.

meanwhile, Amazon will just comply and pass on the extra VAT cost to the consumer. which was rather the purpose of the exercise, they just decided to make no exemptions to anyone too small to matter, but killing off indepedent selling in the process.

Only on sales of items to people in other countries - in the UK the VAT allowance of £81000 will still be in place.

the problem isnt so simple as you are going to have to prove that they are in the UK. like have a "which country are you from" and then blocking non-UK users. i wonder if this would even be legal in the EU.

the daftest thing is there's no change for the vast majority of trading, where goods are involved and need to be sent to a physical and therefore easily verifiable country. so Amazon can still cut prices on all physical items due to using lower VAT rate Luxemburg. this will only affect digital goods where physical location is unnecessary. masterful application of regulation, missing the main target and attacking a nascent industry (unless that is of course the objective, before those small private industries become disruptive ones).

i look forward to some simple work around like send a pen with the digital service an added free extra.

 

[Westdene Seagull]

the issue is that theres little to no provision to determine the origin of the purchaser. if you use some sales platform (i.e. Ebay) they can feed information to verify country of origin, but for independent sellers using their own website and a paypal button, they wont have anything - paypal isnt obliged to provide such information. two peices of evidence is particularly onerous when even one will be difficult. IP isnt viable without a third party tools, which means more complicated tools for the simple site to install and manage (and isnt reliable anyway).

it means small sellers have the choice of adopting a platform (with fees), stop selling from private websites, becoming VAT registered for any trading, or carrying on regardless and risk punitive fines when caught. because unlike other nations, our HMRC will go after the little people if its easy enough and this will be easy, they'll just hit you for a tax bill and if you cant prove no sales to the EU, you'll have no defence.

meanwhile, Amazon will just comply and pass on the extra VAT cost to the consumer. which was rather the purpose of the exercise, they just decided to make no exemptions to anyone too small to matter, but killing off indepedent selling in the process.



the problem isnt so simple as you are going to have to prove that they are in the UK. like have a "which country are you from" and then blocking non-UK users. i wonder if this would even be legal in the EU.

the daftest thing is there's no change for the vast majority of trading, where goods are involved and need to be sent to a physical and therefore easily verifiable country. so Amazon can still cut prices on all physical items due to using lower VAT rate Luxemburg. this will only affect digital goods where physical location is unnecessary. masterful application of regulation, missing the main target and attacking a nascent industry (unless that is of course the objective, before those small private industries become disruptive ones).

i look forward to some simple work around like send a pen with the digital service an added free extra.

Great post highlighting the sheer stupidity and incompetence of the EU.

 

[Camicus]

Great post highlighting the sheer stupidity and incompetence of the EU.

Blah blah blah the EU sucks as a patriotic Englishman.... FFS even when the EU get it right you moan. Its better to close the tax loops than to keep them open!