VAT MOSS update – part one

VATMOSS, VAT advice for designers and makers, PDF, patterns

Emma Jones from Enterprise Nation kindly organised a call this week (on Wednesday 17 Dec) with HMRC and some marketplaces to discuss VATMOSS and in particular to clarify who was liable and how those liable could comply.

It was a constructive chat and HMRC are clearly doing their best, given the European ruling, to help people to comply using VATMOSS. As Emma said, the lobbying for change needs to happen at an EU level not with the HMRC and we’ll help with that lobbying. What is also worth stating is that the legislation that affects “e-services” is effectively a trial and it is expected that physical products will be affected too. The timescale for that is unknown.

During the discussion I was concerned with three main things:

  • Who is liable to pay? (ie. the definition of a marketplace)
  • Whether the services provided by some Folksy sellers constitute “e-services” as defined by the legislation
  • If any liability does occur – through Folksy or the sellers – how we can most easily enable compliance with VATMOSS

1. Is Folksy a marketplace as defined by the legislation?
There is still some debate about this (we find the legislation quite confusing!) so we are engaging in talks with HMRC to try and get confirmation on this. For the moment we are presuming we are liable.

2. What are e-services?
The debate around e-services regards whether the digital products are delivered via “automatic download” with “no significant human intervention”. I argued that as Folksy has no automatic download the definition rests on what constitutes “human intervention” and gave an example of how a PDF pattern sold to a customer would involve human effort and intervention. It would seem that the act of emailing and transacting to delivery the PDF (or image file or design work) is significant human intervention. We believe it is and will be stating this to HMRC in ongoing discussions, however this still needs to be determined.

3. Compliance
At present we don’t know if there is any liability. However, in the unlikely event that Folksy sellers are liable we will be able to provide you with the data you need to comply. PayPal provide Folksy with a 2-digit country listing and we can tie this to an order which contains details of the seller account and the amount of the product / “e-service”. We’ll provide more information to any people affected about how we will deliver this in January.

So, we’re moving forward, slowly. Bear with us, we hope to have further clarification soon.


Main image: Cactus Earrings by Finest Imaginary (because it’s a prickly issue)