VATMOSS – the first quarter

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

My books are currently sold via SendOwl and I import that data into Xero. SendOwl also provides a VAT MOSS report so I was able to check that the two matched up.

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?

One Comment

Heather Burns April 9, 2015 Reply

“How do we get into a position where businesses like ours are considered when legislation is created?”

There are two things that need to happen. First we have to be counted, literally. We are not. The official UK government economic taxonomy is grounded in its 1948 definitions and has not been revised in over a decade. Your work is likely categorised as “Other business support service activities not elsewhere classified.” If it feels like the digital economy doesn’t register to policymakers, it’s because it really doesn’t. See

Second, and I am getting more vocal about this by the year, is that nearly twenty years into our profession’s existence, we still refuse to organise and professionalise ourselves on any cross-platform level. We have no Royal College of Web Developers, or Chartered Institute of Web Designers, to provide us with professional development and a legislative voice. The sneering astonishment which some members of the accountancy profession registered about us not knowing about the law was because they have multiple professional societies and guilds spoon-feeding them this information. We have Twitter and the occasional after-work meetup in the pub. Because we don’t respect ourselves as profession, we are not respected back. We need to professionalise – literally, profession-alise – and carry out our work with more structure than we have in the past.

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