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Irish Revenue: We apologise for any inconvenience caused

 Irish Revenue to VAT MOSS filers.

If you sell electronic goods or services in Ireland, there’s a good chance you received a strange payment reminder letter from Irish Revenue earlier this month. You’re not alone. Approximately 2,000 payment reminder letters were issued in error to taxpayers registered under the VAT MOSS.

The erroneous letters requested absurd amounts. Dutch author Gerben Wierda, who sold €54 worth of ebooks in Ireland during the first quarter of 2015, told The Irish Times that the letter addressed to him assessed his liability at €3 million for Q1. The actual amount is closer to €12. A noticeable discrepancy, to say the least.

Soon after sending out the letters, Irish Revenue posted the following Notice to VAT MOSS Customers on its website:

“Revenue has recently issued approximately 2,000 payment reminder letters to suppliers of eServices who are registered under the VAT MOSS scheme. This is in accordance with the rules of VAT MOSS, where payment has not been received by Revenue in respect of a past tax period.

Unfortunately, due to a technical error, the information contained in these reminders is incorrect. Revenue is in the process of correcting the errors. In the meanwhile, the recent payment reminders should be ignored.

In due course, new and accurate reminder letters will issue to any remaining customers who have not made the appropriate payments.”

According to a Revenue spokeswoman, all taxpayers who received the faulty notices have been identified and Revenue “will make contact with each of those customers.” She added that there is no financial impact “and Revenue apologises for the inconvenience caused.”

Not easier

Sourcing rules for cross-border sales of digital services in the European Union changed on January 1, 2015. Instead of basing the rate on the location of the seller, the rate is now based on the location of the buyer. Instead of applying one rate to all sales, sellers must calculate and collect multiple rates. In theory, the change creates a more level playing field. No one said it would be easier.

Shortly after implementation, the UK’s HMCR adopted a grace period for small sellers. Sally Beggs, Deputy Director of Indirect Tax, noted at the time that the simplifications “should help make operating under the new rules easier.” Many businesses were worried that the new rules would force them to shutter. An EU Observer opinion piece posits that this has already happened, that thousands of microbusinesses have closed due to the new EU Digital VAT rules because compliance costs “far outweigh the revenue collected.” Perhaps the recent fiasco at Irish Revenue reveals additional, more subtle costs.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.