EU VAT MOSS ‘fraud’ was Irish Revenue error

Over 2,000 letters sent last week demanding Irish VAT payments from EU providers of digital services to consumers have been confirmed as an administrative error by the Irish Revenue service. Originally it had been believed that the letters were an attempted scam to dupe providers into paying over money into a fraudulent Irish bank account.  The demands were sent to UK-based companies who had registered with the UK's HMRC as cross-border digital services providers.

It is unclear still how the error by the Revenue occurred as they would not normally have to deal directly with such companies – this would be the responsibility of the local national tax authorities. The Revenue will have been passed the details of the customers by UK's HMRC; but would not have the right to raise any tax assessments directly with the UK companies.

From 1 January 2015, providers of digital services are required to charge the VAT rate of the country of their customer - rather than of their own country.  To help simplify the compliance reporting process, the EU member states each created a Mini One-Stop-Shop (MOSS) online portal.  Providers are now able to register with this portal, and make a single, quarterly return which covers all other countries where they are selling digital services to consumers.  This eliminates the need to VAT register in each state where they are selling.