21 October 2014

Electronic services - VAT

Graham Elliott
Consultant | UK

If you provide any electronic services then this may affect you.

Electronic services are services delivered in an essentially automated way, with no real human intervention. Typically they involve downloading text or sound/vision files.

If you sell such services and any of your customers are private purchasers who are located in other EU states, then you need to prepare for a change that takes place on 1 January 2015. From that date you will need to account for VAT, at the local rate, for services provided to such purchasers. To ‘facilitate’ this, there will be an arrangement whereby you register to submit a return covering the other EU states, and on which you will specify the supplies made to each state and the VAT that needs to be paid to each. You then make one payment covering the entire aggregate liability, and HMRC does the rest of the work for you. You cannot simply continue to account for UK VAT instead.

If this sounds like it affects you, take advice on what to do. Arrangements can start being made this month to prepare for the new regime. HMRC published information on 20 October here.

We would be happy to advise you on this.

Graham Elliott Consultant | London

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