UK-based online merchants will be affected by 2015 VAT rules

DUBLIN | Major VAT rule changes impacting how tens of thousands of UK e-service merchants do business in the EU are less than four months away, yet the majority of those affected are unprepared and may be at risk of heavy non-compliance penalties. 

Ill-equipped for coming VAT changes

Technology provider Taxamo, who offer software that helps companies navigate and process the new rules, say that e-service merchants, many of whom are small-to-medium sized businesses and were previously small enough to be exempt from UK VAT rules, are ill-equipped to deal with the significant obligations that come with the 2015 rules changes.

“We are highlighting this issue because every day we are taking calls and answering enquires from merchants who are confused by the new rule changes and don’t understand what they need to do to comply,” said John McCarthy, CEO of Taxamo.

UK-based online merchants will be affected

HMRC has estimated that some 42,000 UK-based online merchants will be affected by the new rules and a sizeable portion of these will be small-to-medium sized businesses, many of whom don’t currently have to register to pay VAT in the UK. However, as there is no minimum threshold applied to the new rules, and given that the existing VAT registration threshold in the UK is £81,000, thousands of small businesses will now be brought into the VAT net.

Making e-merchants aware of the new rules

Recognising the need for additional information for merchants, Taxamo are working closely with HMRC to continue to make e-merchants aware of the new rules. Marking the 100 day countdown to the adoption of the new rules, on Tuesday, September 23, Taxamo will host an interactive panel event aimed at giving merchants practical information on what the new rules mean for them, and how they can prepare.

The event, which will be streamed live from Barclays Accelerator in London, will give merchants the opportunity to get first-hand information on the rules, with the option of asking questions to the expert panel. Click here for more information on Taxamo's interactive panel event. Taxamo has also made a video on what the 2015 VAT changes are. Click the image below to view the tutorial.

Taxamo Video VAT changes 2015


New EU VAT rules for online businesses

The new EU VAT rules require merchants to identify where their end customer is located by collecting two pieces of non-conflicting evidence and then applying the correct VAT rate. There are additional compliance obligations around reporting VAT receipts, storing information on VAT transactions for ten years and ensuring compliance with the various VAT regimes across the EU.



Liable for penalty

E-service merchants who do not comply with the new rules are liable for penalty in the jurisdiction of the Member State in which they have infringed on VAT laws. “The sad part here is that even if a merchant is unaware of the changes, through no fault of their own, it will be them that will suffer. As a small e-service company ourselves, we empathise with the challenge facing merchants and want to do our part to increase awareness,” McCarthy said.

About Taxamo 

Taxamo provides a real-time Software as a Service (SaaS) solution for compliance with 2015 EU VAT rules on the sale of e-services, enabling merchants to achieve full compliance with the rule changes, without impacting the existing customer journey. Read also their article of June 2014 ''New EU VAT directive nightmare for e-businesses'.

Article sourced from Press Release Taxamo, September 16th, 2014.

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