VAT MOSS and ECS?

[bacizone]

Hi,

I am a VAT MOSS registered sole-trader supplying digital products only through a UK e-commerce website.

According to the new EU regulations of digital goods I've already registered and paid the VAT MOSS regulation based taxes for both Q1 and Q2 2015 periods for HMRC.

My problem: I also got VAT101i (VAT EC Sales List) forms from HMRC and VAT assessment amount to be paid.

My website is primarily targeted toward general end users who are not VAT registered at all. Some of my customers are EU business entities indeed, but these small businesses and freelancers seem not to be VAT registered, so generally they need to be treated as a consumer for tax purposes. As the gov.uk guide states, ‘If you supply digital services and your customer doesn’t provide you with a VAT registration number (VRN) then you should treat the supply as B2C.’

During the years of operation there were no customer or supplier at all who supplied any VAT registration number.

My question:
As I've already paid the VAT after the EU-based customer (the VAT MOSS) why should I pay additional VAT by the EC Sales List? I did not supply any goods to VAT-registered customers in the EU.

Thanks for your help!
B.

 

[Rory Downey]

EC Sales lists are not for paying VAT, only for reporting Sales to VAT registered customers.

 

[bacizone]

Thanks for the reply.

As I did not send VAT101 at the beginning, they made an estimation and have to pay this assignment - actually for nothing...

As it is not possible to submit a nil ECS report, what are my options?
- Shall I claim to stop sending VAT ECS lists for me?
- Or should I apply for "Simplified ESL" (I meet all its three requirements)?

Please advise.

 

[Rory Downey]

Are you selling to VAT registered customers? If not then call and de-register. Due to the DSR extensions over the past year, it has become common for people to de-register from the EC sales list

 

[bacizone]

Thank you, I will do it.

 

[bacizone]

Sorry, just two more questions:
1. You told me above that "EC Sales lists are not for paying VAT, only for reporting Sales to VAT registered customers."
Then why do they charge VAT?

2.
At gov.uk vat-how-to-report-your-eu-sales page you can find: "if you haven’t made any supplies (or issued any credit notes) in the reporting period, don’t submit an ESL."

Why do HMRC suppose that I made supplies to a VAT registered EU customers if I do not send in a ESL report?

 

[Rory Downey]

I'm not sure where you see that they charge? Is it late filing fees?

 

[bacizone]

I am not sure, it is called "assignment" due to the lack of submitted paper report, it seems to be an estimation. It is due tomorrow. I've already sent them a letter last week explaining the situation, but I still get no reply from HMRC. I requested to remove me from the ESL system.

Should I pay it and request a refund later or just wait until they answer?

I do not want to pay additional penalties...

 

[Marie Stein]

It's actually very difficult to give you a proper answer without seeing the paperwork and understanding why they've sent an assessment. I wonder if there has been some confusion about the amounts declared on yuor MOSS returns and what you've shown on your UK VAT return.
You said that you've written to HMRC but had no reply - not surprizing as their turnaround is usually 3 - 4 weeks! Can I suggest that you call the VAT helpline to discuss the situation?

 

[bacizone]

According to the gov.uk / register-and-use-the-vat-mini-one-stop-shop (sorry I can not post full link yet) "you don’t need to account for and pay VAT on sales to your UK consumers." in case of ‘Supplies of Digital Services’ business.

So I do not have to submit a UK VAT return then, do I?

 

[Marie Stein]

Now I think I understand your problem! You are correct that you don't have to charge UK VAT if your sales to UK customers are below the registration limit, but you MUST submit a "nil" VAT return - see HMRC guidance http://tinyurl.com/o6rks4k. This is IN ADDITION TO your MOSS return, where you declare VAT on sales to customers in other EC countries.

See the section "Businesses currently trading below the VAT registration limit" and the section about completing VAT returns where it says:

"UK VAT Return
You’ll need to complete a UK VAT Return each quarter even if you aren’t charging VAT on your UK sales.

Unless you want to reclaim VAT on business expenses or purchases in relation to yourEU sales, you should enter ‘0’ in every box on the return. If you do want to reclaim VAT in relation to EU sales, you should complete boxes 4, 5 and 7."

If you haven't submitted a VAT return, then HMRC will automatically issue an assessment. Once you submit the NIL return, the assessment will be withdrawn. If you're unsure how to submit the return, go to https://www.gov.uk/vat-returns/fill-in-your-return.

The assessment doesn't have anything to do with the EC sales list - that's only if you're selling goods to VAT registered businesses in other EU countries.

I think this should get your situation sorted out.
Marie

 

[bacizone]

Thank you Marie very much for your clear explanation, it is finally clear now!