Spring has sprung, along with birds singing and a visit from the Easter Bunny those of us with the temerity to sell digital products to our European neighbours have the joy of our first VAT MOSS return.
I have navigated this exciting process, and am documenting it here in case it is of help to anyone else.
Our sales are mostly of our software Perch, with a smaller amount of sales of my ebooks which I moved to be sold via the company in preparation for the VAT MOSS change so I wouldn’t also need to be VAT registered. Perch sales are entered into Xero via the API using our own backend system. We take payments via PayPal and Stripe and are logging three pieces of evidence for proof of location in our database. That information is:
- Country of customer entered address – we check addresses for accuracy using Postcode Anywhere
- IP Address
- The data we receive back from Stripe or PayPal as to customer or card location
Xero provide the ability to create a report of VAT MOSS data. I followed the instructions here. Note that the Account Transactions report you need to use is the new style one, accessible from Reports > New Reports.
With my data in hand I was able to log into the HMRC Online system. This system comes to you directly from 1999, have fun. SendOwl have written a step by step guide to submitting your data. I discovered when doing ours that the system did not recognise valid reduced rate VAT rates from certain countries, however you can ignore the error and submit the data anyway.
After submitting your data you need to pay the VAT due by bank transfer. The system just dumps you at the generic “How to pay HMRC” page. The information about paying your MOSS VAT can be found here.
The good news for people who have managed to avoid needing to register so far, is that there is hope for this horrible legislation to be changed for microbusinesses. While this is great news, I feel as if companies like mine that invested a huge amount of time and money into preparing for this will essentially be collateral damage.
As a person who loves to encourage others to build and sell digital products I’ll be happy if we can see the back of VAT MOSS for people like us. However I feel that had HMRC promoted the change, and understood the full impact earlier, we could have kicked off the campaign for change early enough that people didn’t need to do expensive and time-consuming work to prepare. The fact remains that when I wrote about the issue last October, there was barely any mention of the impact of VAT MOSS other than the odd note in accountancy firm briefings. I have no interest in party politics, but how do we get into a position where businesses like ours are considered when legislation is created?