Changes to VAT

03 February 2015

Changes to VAT came into effect on the 1st of January 2015, and Labour MEPs, have received many emails from constituents with concerns about the implications on small to medium-sized business.

The aim of the new legislation is to make the tax system fairer by ensuring that VAT is paid where a service is consumed. This would prevent situations like the current one, where a service can be provided by a company registered in Luxembourg, for example, where the VAT rate is 15%, but consumed in the UK, where the VAT rate is 20%.

Although the principle behind the law is understandable, the implementation of the legislation has been severely lacking. In particular, the communication around this issue from the UK government has come very late and been of very poor quality. Little thought appears to have been given to small and micro businesses when it comes to the implementation of these measures.

Therefore Labour colleagues on the economic affairs committee have been speaking to both UK and EU officials to enable a smooth transition and improve the quality and quantity of information available in the UK.

Due to these problems, Labour MEPs have written to the responsible Minister to ask for emergency measures to aid small and micro businesses attempting to navigate the legislation, and have also tabled a written question to the European Commission.

After pressure from Labour MEPs HMRC has created a special 2015 email address and helpline for specific enquiries: vat2015.contact@hmrc.gsi.gov.uk 0300 200 3701

You may also find some useful answers in the information that the HMRC recently published. https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance.

The following you tube link (not provided by HMRC but by a private company) gives detailed information on information collection, data storage and the definition of digital services which you may find helpful: https://www.youtube.com/watch?v=lbb0e1YYT_E

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