Selling digital downloads B2B - to UK, EU or other countries -VAT, EU sales list, VAT MOSS questions

[Elizabeth Cadd]

Hi all, reposting this thread here as it's probably more relevant than Starting Business forum and I need some experienced advice please!
I'm stuck - I can't start selling online until I've worked out what to do regarding charging or recording VAT on sales.. I am not VAT registered yet (and I haven't traded yet until I know what to do).. but I think I may need voluntary VAT registration?? Guidance would be really appreciated, I've spoken to HMRC, an accountant and other business people, read various HMRC stuff, but still not entirely clear about the way to go.. I hope someone can help. I'm creating a flow diagram to understand this - so please correct me if it's wrong:

I'm selling high price digital downloads in most cases it'll be B2B sales. - Lets estimate I sell 30 downloads this year to start. I want to sell to UK, EU and other countries online. Here is my understanding:

Scenario 1 - UK sale (B2B, Vat registered) - A VAT number is given - so VAT is not paid (reverse charged?) Does this just go in my VAT records?
Scenario 2 - UK Sale (B2C, not VAT registered) - No VAT number given - charged VAT at 20%.
Scenario 3 - EU Sale (B2B, Vat registered) - VAT number is given - so not charged VAT ( but proof of Place of Supply, tel, address or IP required for EU Sales List)
Scenario 4 - EU Sale (B2C, no Vat number given) - so assume B2Customer > so charge VAT at their EU country rate. Use VAT MOSS to record/pay back VAT.
Scenario 5 - Other Countries sale (B2B) > do I charge anything??? - Use Non Union VAT MOSS to record/pay back VAT.
Scenario 6 - Other Countries sale (B2C) > do I charge anything??? - Use Non Union VAT MOSS to record/pay back VAT.

Am I right in thinking I will have to go VAT registered for selling abroad generally? Hence, should I be charging VAT to UK or is there a special threshold for digital sales within the UK I can separate out?

Anyone got a visual example of how to keep track of these different VAT type sales ?

As you can see, what was a simple business idea, is now very complicated because of VAT, not to mention the B word.
Your advice will be really helpful,
Thanks, Elizabeth

 

[arnydnxluk]

You'll need to register for VAT MOSS if making B2C sales in the EU.

To register for VAT MOSS, you'll first need to register for UK VAT but can file nil returns if below the UK VAT threshold.

The government website covers much of this subject:

https://www.gov.uk/guidance/register-and-use-the-vat-mini-one-stop-shop

Or you can save yourself all the hassle, at least to begin with, and use something like this:

https://payhip.com

Relevant page: https://payhip.com/eu-vat

 

[Elizabeth Cadd]

Hi Mike, my sales should be almost exclusively B2B in any country... Read all that HMRC stuff, it's not particularly clear, that's why I'm trying to clarify here...

Thinking that I have to be Vat Reg to deal with any (unlikely)potential non B2B transactions in the EU. All B2B should go through EC Sales List.
For a sole trader well below VAT threshold I understand I don't need to charge VAT in the UK to anyone til 85k. Correct?

Also E -commerce software checks locations, but can't check VAT numbers unless I'm Vat Reg too.( woo commerce).

Not sure about US or other countries - no VAT at all?

 

[Elizabeth Cadd]

Just posting this summary of all the info I've gathered. Disappointing not to have things explained more clearly on the internet, HMRC etc.. especially for new online businesses. If someone spots an error, please let me know!

My business is based in the UK and will stay well under the 85k UK VAT threshold.
I sell exclusively digital downloads.

UK B2B (or B2C) sales = no VAT charged.
(No Vat charged up to 85k in UK - make nil UK VAT returns if below this threshold)

EU B2B sales = liable for EU VAT on all my EU digital sales.Reverse charge rule applies for B2B. Use EU Sales List to report these sales.

Companies providing a valid VAT number will not be charged, the business customer must account for the VAT in their country. Use place of supply rules for electronically supplied services. Go voluntarily VAT Reg to use the EU Sales List system.

EU B2C sales
Charge VAT at each EU country rate using place of supply rule.
Use VAT MOSS system here to redistribute VAT I’ve charged.

 

[AbsoluteVAT]

If you are not VAT registered in the UK, you will not need/be able to submit nil returns. Note that domestic sales in the UK contribute towards your threshold. Sales to EU businesses will also count towards your threshold. EC Sales Lists will only be required once registered.

For B2C sales to EU consumers there is now a £8,818 threshold, under this amount you charge UK VAT but only if registered! Of course Brexit could change all of that!

Both B2B and B2C digital supplies to non-EU customers could bring with it a VAT/GST obligation!

Might be worth getting thorough advice on the requirements!

 

[Ray272]

No need for advice IMO.

Although I do have an accountant.

Sounds like your on the ball regarding the VAT and the EC sales data is very easy to report.

Maybe get your hands dirty and I'm sure all the various processes will become very clear after a few sales.

 

[nelioneil]

If you are not VAT registered in the UK, you will not need/be able to submit nil returns. Note that domestic sales in the UK contribute towards your threshold. Sales to EU businesses will also count towards your threshold. EC Sales Lists will only be required once registered.

For B2C sales to EU consumers there is now a £8,818 threshold, under this amount you charge UK VAT but only if registered! Of course Brexit could change all of that!

Both B2B and B2C digital supplies to non-EU customers could bring with it a VAT/GST obligation!

Might be worth getting thorough advice on the requirements!

Regarding the bolded paragraph, what are the implications if a non Vat uk registered business breaches the limit? Will they have to register for VAT (UK and eu) and charge EU vat, even though below UK threshold?