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HMRC warns digital companies on new Brexit VAT obligations

  • Mar 1, 2019 | Richard Asquith

HMRC is writing to thousands of UK, US and other international sellers of digital services to warn them to now VAT register in another EU state in readiness for a no-deal Brexit. This covers their sales of e-services, apps, streaming media, online gaming and dating services, e-books and software to EU consumers.

Around 20,000 digital businesses face having to register for VAT elsewhere in the EU. Many of the US app companies used HMRC’s simplified VAT reporting procedures to cover the whole of Europe. They will now lose this and have to re-register twice, both the EU and UK from 29 March 2019 or risk heavy fines.

UK closes MOSS portal 15 May 2019

Since 2015, EU sellers of e-services to consumers of have been able to declare their pan-EU sales and VAT liabilities in a single Mini One-Stop-Shop (MOSS) VAT return. Most non-EU businesses providers registered in the UK due to the light-touch requirements and English language.

However, following Brexit, the UK will be treated as a third country and will fall out of the EU VAT regime. This means all the UK and non-EU companies that report their EU sales to HMRC will have to register in another EU state after 29 March 2019. 

The last UK MOSS return will be for sales up to 29 March 2019. This return will be due by 20 April. The MOSS portal will remain open until 15 May 2019 for any amendments.

Going forward, UK businesses can report UK sales through their regular UK return. Non-UK providers, EU or non-EU, will have to register in the UK to report VAT on sales to UK consumers.

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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