The EUVAT VATMOSS Campaign. Fundraising to attend a VITAL meeting

This blog has been left to its own devices since the main focus of campaigning shifted to the EU VAT Action Team website and related social media, but I’ll mirror this here, just to make sure everyone gets a chance to see it.

There’s been plenty going on over these past few months with the ongoing saga of EU digital VAT. Don’t believe anyone who tells you that Brussels shuts up shop for the summer while everyone heads for the beach. The emails and calls have been going back and forth as busily as ever.

We now have a chance to convince the EU that they must take decisive action to put a stop to the damage these regulations are going, at the EU Finance Ministers’ summit in Dublin, 7th – 9th September. As long as we can afford to send a representative to speak up on behalf of everyone so badly affected. The EU VAT Action Team has held off asking for money for as long as possible but now we need financial help.

Let me explain how we got this far…

With the ongoing and invaluable assistance of MEPs Vicky Ford (Con), Anneliese Dodds (Lab) and Catherine Bearder (Lib Dem), we’ve continued to make the case for reform and interim suspension of this legislation which is still proving unworkable and hugely damaging for the digital small business sector. It’s no exaggeration to say that it’s already killing the digital single market at the grass roots level.

Thanks to ongoing pressure from all the campaign’s supporters, through letters and calls, Deloitte have now been instructed to work with us and to accept our evidence as they prepare an impact assessment for the EU Commission.

Here in the UK we’ve been working with senior figures and VAT experts within the accountancy profession and other business organisations, as we continue to collect evidence of the hugely disproportionate costs of compliance, for the sake of paying trivial amounts to the tax man. We’re talking typically under £10. Yes, really.

We’ve also been collecting evidence of ongoing problems with the entire system. Such as small businesses in the UK being hounded directly by other countries’ tax offices over discrepancies which aren’t even their fault, of under £1, €1, and in one case, 5p. Yes, you read that right. The supposed agreement that such queries would be directed to HMRC simply isn’t holding.

Once again, letters and calls from all the campaign’s supporters to their MPs and other representatives have bolstered the EU VAT Action Team’s case. Feel free to continue writing!

We’ve reached the point where EU Commissioners Donato Raponi and Andrus Ansip are convinced this legislation needs a threshold to make the system workable. And while the details of that are worked out, we need an interim suspension for the smallest businesses who’ve been the hardest hit.

Now we need to convince all 28 EU Finance Ministries. To do that, we need to send a representative to Dublin. At our own expense. Welcome to modern participatory democracy – your voice will be heard as long as you can pay to play.

So we’ve set up a Just Giving page, with a target of £3000. If we don’t reach that in a month, every pledge will be refunded. And, obviously, we won’t be making the case for such desperately needed changes in Dublin.

Assuming we can reach that target (and passing it would be good!) the first priority will be meeting the Dublin trip’s costs. After that, we’ll refund the expenses the EU VAT Action Team have been covering out of their own pockets thus far.

For instance, my own tally for train fares and other direct costs is now approaching £500. That’s used up most of my own business travel and promotions budget, so if you’ve been wondering why you haven’t seen me at SFF conventions this year, there’s your answer.

(We’re not even trying to calculate the hundreds of hours and thousands of words we’ve spent on this, in meetings, writing letters, briefings and blogposts… And the rigmarole of setting up a bank account has been another saga in itself…)

Once those direct costs have been met, any surplus will be donated to Kiva, a non-profit microfinance company alleviating poverty in the developing world by enabling people to create their own opportunities, meeting their own communities’ needs.

We’ve already demonstrated that a lot of small voices protesting together can have a big impact. Now a lot of small donations could very quickly give us the sum we need to see this campaign achieve the changes to the legislation that all of us so desperately need.

Please give us whatever you can afford, and spread the word as far and as fast as possible.

Many thanks.

(For those of you who prefer to use PayPal, we are looking in to that option and will post an update as soon as that’s available. But as with setting up the bank account, getting a Donations button turns out to be an unexpectedly lengthy and complicated process.)

Why it’s a vital week for another round of email and letters about EU digital VAT

Today and tomorrow, the European Parliament will be debating –

– the problems they’re now aware of, relating to the new regulations on cross-border digital sales now needing to be taxed at the VAT rates applied in the customer’s country rather than the sellers.

– the impact this will have on hopes for a digital single market across Europe.

Since most companies are avoiding the many and varied problems with this new system by blocking sales outside their own country, ecommerce across Europe looks to be massively set back.

Thanks to 6 months of intensive lobbying, the EU Commission and various coalitions of MEPs now recognise the need –

– to review and revise these regulations to make them fit for purpose

– to establish a turnover threshold below which businesses are exempt from the frankly ridiculous costs and other burdens of compliance.

This really is a tremendous achievement when you consider that when this news broke last November, we were being told not to worry, the VATMOSS system had it all sorted out and everything would be fine…

HOWEVER the EU Commission are still talking in terms of a review process leading to new proposals which will take at least 2 years to see meaningful change.

The MEPs who’ve been most active supporting this campaign are making it clear that such delay is unacceptable with digital traders already forced to restructure their businesses or shut up shop.

What we need is an interim suspension while that review process is underway.

The more voices that support them, the better the chances of getting that suspension.

Please contact your MEPs – and if you get a stupid form letter full of Treasury waffle, send a reply straight back saying that’s unacceptable!

If we don’t get any immediate relief from the European Commission, then we need the UK Parliament to act. There is provision in law, and precedent, for an Extra Statutory Concession to save UK businesses from the destructive effects of this legislation.

Even though Parliament’s not yet sitting after the general election, MPs are in their offices, sorting out their priorities. You can help make sure this issue is high up on your MPs agenda. And if you get a stupid form letter full of Treasury waffle, send a reply straight back saying that’s unacceptable!

This is a very handy online resource to help you write to all or some of your local, national and international elected representatives at once – the ‘Write to Them’ website.

You can find details of your MEPs here.

MPs in UK Parliament

Scots – find your MSP
Northern Ireland – your MLAs
National Assembly for Wales – members

Consider contacting your local press and media, as well as national newspapers and broadcasters. One letter or email will probably get filed as trivial. A whole batch of letters or emails on the same topic suggests there’s a story to be had – and the UK’s relations with the EU is very much a hot topic at the moment.

There’s a whole lot of information available over at the EU VAT Action website now.

The damage done to consumers by all this

Discrimination caused by these new rules

Why some simple IT solution is not going to appear, now or in the future.

Why selling through 3rd party marketplaces isn’t an answer

The EU VAT Action Team’s impact study

A tangible result from all the hard work by the EU VAT Action team, backed by thousands of you.

So here’s a tangible result from all the hard work by the EU VAT Action team, backed by the thousands of you who’ve filled in the survey, written to your MPs and MEPs, made constituency appointments, rebuked your professional associations, so on and so forth.

David Cameron is set to challenge European Commission president Jean-Claude Juncker over the impact of the new VAT levied on digital firms. The story’s also in the FT, though that’s behind a paywall online.

We did that. By which I mean ALL of us!

There’s still work to be done, of course. The latest EU VAT Action call to arms is here , and please do spread the word with all your friends and contacts across Europe and elsewhere overseas. Let them know this is the site to check for updates and information on who to write to and about what.

Now you must excuse me, as I need to prepare for meetings in London today and Brussels next week…

Clare Josa and I will be taking your concerns direct to the EU Commission and the European Parliament next week. On Tuesday evening Clare’s presenting our survey findings at a formal dinner on the barriers to the Digital Single Market, organised by the European Internet Forum, and attended by MEPs, their staff and the EU Commission / EU Council representatives.

On Wednesday morning, Vicky Ford MEP is hosting a breakfast meeting where we can directly brief MEPs, EU Commission Advisers and PayPal. We’re hoping for more MEP meetings later in the day, including meeting with the Dutch Labour MEPs, and hopefully a formal meeting with PayPal, where we will be pushing for them to release the customer’s VERIFIED country code for ALL transactions, as well as to allow 2+ rates of VAT per country, not just one.

No.10 Downing Street has also agreed to formally request meetings for us with Donato Raponi and Andrus Ansip later this month. Fingers crossed that this prompts something definite – we’ve had tentative arrangements thus far which keep getting postponed.

That’s the latest news! And hopefully explains why a lack of recent updates here doesn’t mean we weren’t still hard at work!

Update on how to tell EU Commissioner Andrus Ansip your new digital trading difficulties.

EU Commissioner Andrus Ansip, who’s responsible for European Digital Single Market initiatives, is one of the key people we need to convince of the damage being done by the new requirements to tax digital products at place of consumption, not supply.

He’s starting to realise there’s an issue here… and has arranged this Twitter chat. for Monday morning, 23rd February.

Over on the EU VAT Action website, we’ve posted details on how to make the best of this opportunity.

Which is all very well, if you’re on Twitter, live in the same time zone, and not in paid employment at that time, because you run your digital business during your evenings and weekends…

well, firstly, if any of those barriers mean you won’t be able to participate, drop me a line with what you want to say, and I will do so on your behalf. You can also contribute via Facebook if you wish – details on that EU VAT Action update.

Secondly, EU VAT Action is having another online action drive from 5pm GMT on Monday. We really, really need to alert other European finance ministries and tax authorities to the problems all this has created, so we’ve found email and contact details for as many of them as we could, to help people target their communications most effectively.

They need to know how #EUVAT is hurting your business. The more hard data and detail you can give, the better.

They need to know why third-party platforms and tech solutions aren’t the answer. Tell them how much those would cost you – and how they don’t even necessarily help.

They need to know digital microbusiness needs a threshold specifically, and only, in relation to this law, below which they’re exempt from this particular legislation only.

Below that threshold each country’s domestic VAT rules for small businesses would continue to apply, so member states’ national sovereignty over taxation would be untouched.

A busy and productive week for the EU VAT Action Campaign Team

For a SF and Fantasy novelist, I’m spending a remarkable amount of time being an activist at the moment. Well, it needs doing.

You’ll recall I met David Cameron, the UK Prime Minister to discuss the problems for small businesses created by the new EU digital VAT regulations on cross border sales? As a direct result of that meeting, the PM’s office set up a meeting for Clare Josa and me, on behalf of the EU VAT Action Team, with his special adviser Daniel Korski of the No.10 Policy Unit.

The full report – and actions you can now take to help everyone affected – is here.

To summarise, the UK Government now realises just what horrendous difficulties these new regulations have created. Countries creating wonderful MOSS systems to handle collecting the new taxes and paying them to each other is not the slightest use to the digital sellers whose businesses are now so horribly complicated by the need to locate and appropriately tax their customers at the initial point of sale.

They’ve also acknowledged how vital it will be to have end-user input into any discussions about any proposed technical or other implementation solutions. We’re already following up on that.

The people we need to convince now are the EU Commission and national finance ministries across Europe. Okay then…

EU VAT Action will be rolling out assorted calls to action with a particular focus on Europe. Something we particularly need is as many non-UK businesses as possible completing our survey. We’re currently working on making the survey available in other languages.

The first opportunity we have to make ourselves heard is a Twitter Q&A session with Andrus Ansip on Monday 23rd February. He’s the EU Commissioner for the Digital Single Market – which is of course being wrecked by all this. His blogpost is here and EU VAT Action will be offering some ideas for effective participation.

I’ve also met with Catherine Bearder MEP this week, and spent an extremely productive hour and a half going over all the key issues with her and getting her invaluable input on how best to get our voices heard in Europe. Subject to final confirmation, key EU VAT Action team players will be heading for Brussels in the week commencing 16th March.

So we’re definitely making progress. Keep backing us up and we’ll make more!

We need to let policy makers know why selling via 3rd parties isn’t a VATMOSS solution.

This past week has seen some major Twitter and other online uproar over Patreon’s ‘not our problem’ stance on handling the new EU VAT for their users – buyers and sellers. Not helped by the fact that PWC aka Price Waterhouse Cooper, their massively expensive accountants initially gave them 100% inaccurate advice. Apparently the issue is now under review…

This isn’t the first such uproar and more than one business has effectively been bullied – by HMRC and the EU, not their customers – into hastily coming into line with the new regulations and the decree that 3rd party marketplaces are responsible.

On one hand it’s good to see organisations like Gumroad, Etsy etc taking on the VAT headache for their customers – especially given it’s apparent they were given nothing like appropriate notice that all this chaos was heading their way.

On the other hand, so many of our businesses still need a workable option for selling direct. For reasons that don’t necessarily relate to money – or not only to money.

For me as a writer, that direct contact with readers is vital to building an keeping a fanbase, and one way to enhance that relationship is by offering advance sales of new books and side projects exclusively via my website. And yes, that’s also a way of maximising my income from new releases which is also money that comes to me at once, not a month or more in arrears via Amazon etc.

I’ve seen a software developer elsewhere explaining how initially offering apps direct from his own website is an important way to establish which new ideas are worth pursuing. These aren’t suitable for putting out via 3rd parties.

I’m sure there are similar considerations for any number of other businesses.

The first tangible result of my own meeting with David Cameron last week is a meeting scheduled for the EU VAT Action campaign with the No.10 Policy Unit next week. This is something I want to raise.

It would be really, really helpful, if you could let me know your thoughts on this by Monday.

Alert the OECD to the EU Digital VAT catastrophe

This week and next will see a series of online initiatives from the EU VAT Action​ team.

To start with, we want to alert the OECD to the EU Digital VAT catastrophe. At the moment, they are looking at international VAT/GST guidelines and the public consultation period runs until 20th February.

This is a hugely important opportunity for everyone to voice concerns over the ways in which start-ups and small businesses are being wrecked by the new EU regulations on VAT payable on cross-border digital sales.

It is particularly significant for those in OECD member countries outside the EU such as the United States, Australia, Canada and New Zealand. This is the best way to make your voice heard on this matter.

Here’s the EU VAT Action website’s blogpost with full details, including links to detailed guidelines to help you prepare submissions.

Once you have sent your submission, please tweet to let us know and to help encourage other people to do the same, using the #EUVAT and #VATMOSS hashtags. Spread the word about this opportunity for positive action through your other business and social networks!

The EU VAT Action Campaign – recent and upcoming events

Last Monday saw the EU VAT Action team represented for the first time at the HMRC Working Group meeting to discuss implementation of the new VATMOSS system. You may rest assured that we highlighted the ongoing problems which microbusinesses are having with compliance, 3rd party platforms and the VATMOSS system itself, not to mention the widespread failures in European implementation.

Since he’s my constituency MP, I was also able to meet David Cameron last Friday, aiming to make sure he realises what the current problems are as well as their wider and longer term implications. It was a positive and constructive meeting, with every indication that the PM understands the seriousness and complexity of this issue.

While we are definitely making headway convincing the UK government, we still need to convince the finance ministers and key officials in other EU member states that this same trouble is heading their way. They just don’t know it yet because their own digital businesses don’t even know about the new regulations, still less about how impossible the law is to work with!

We need as many non-UK responses to the EU VAT Action survey as possible, as soon as possible.

Please spread the word. We’re already compiling country-specific reports from the data we do have – and the picture in the Netherlands for instance, is horrifying.

We want as many people as possible to contact the EU Commission’s Taxation Department with a personal complaint and also to submit comments to the OECD’s current consultation on implementing this sort of taxation.

Sounds daunting? We’re putting together clear guidance on how to go about it and on Thursday 12th February, we’ll be having a major online push to inspire as many people to act as possible.

On Wednesday 11th February I’ll be part of a Google Hangouts live online event at 7pm GMT organised by the The Alliance of Independent Authors to discuss the new regulations, VATMOSS and associated issues.

I’ll be particularly focusing on the campaign and the actions everyone can take to help. The more voices raised, the better the chances of being heard!

If you can’t make that particular time, you’ll be able to access a recording afterwards – check back for linkage in due course.

Could the EU Commission be legally challenged for basing digital regulations in 2015 on 2006 research?

A point that’s been made time and again in general terms, is how vastly different the digital world now is, compared to the situation in 2006 when the new EU VAT on digital sales regime was first being discussed.

Adam Dobay has gone further and looked at the specifics, writing an eye-opening post for the EU VAT Action Campaign Group on Facebook.

With his full permission, I’m posting his research here – and both he and I would be very interested indeed in further information and analysis by those with more detailed technical knowledge.

Similarly I’d very much like to know any informed – albeit informal – legal opinions on whether or not these regulations can be challenged as not fit for purpose or something similar.

As Adam writes –

“”A 2006 EU document is not suitable to regulate digital businesses in 2015” — research [UPDATED 01.26]
I’ve made some very basic research concerning just how vastly different the internet was in 2006 when the EU regulation resulting in today’s rules was on the table — and how surreal it is that us entrepreneurs and all the member states have to draw definitions from something this outdated.

The research was prompted by Les Howard’s article where he states “the definitions of telecommunication, broadcasting, and electronic services are found in the Implementing Regulation 2006/112/EC, arts 6-7. Rather than fret about the definitions applying in different member states, read the relevant article”.

The following is meant as a resource for the EU VAT Campaign Group as well as websites and bloggers who want to highlight differences in a variety of fields. The list is unfinished and the process of adding citations is ongoing — I am continually updating this post as I find new data from 2006 and today to compare (harder than it sounds). If anyone has knowledge of better or more relevant data, please notify me in the comments below.

Feel free to copy, quote, and use in blog posts and other publications, citing Adam Dobay, digital entrepreneur, http://www.cabbitsupreme.com as the source. Thank you!

INTRODUCTION
Concerning the digital marketplace, referring to a 2006 piece of writing in 2015 is highly erroneous. One huge part of the problem with definitions of digital products and services is exactly the significant number of ways in which the internet and digital entrepreneurship have changed in a mere 9 years.

THE INTERNET AND ENTREPRENEURSHIP IN 2006 VS TODAY

Basing regulations on how the Internet looked in 2006 is actuallyreferring to a time when:
– the number of internet users was 35% lower than today [1]

– mobile broadband penetration was 50% lower than today in the EU [2]

– the EU e-commerce market was was 66% smaller than today [11] [12]

– the very concept of “web 2.0” and social networks was in its infancy [3]

– blogging still dominantly meant people keeping personal journals online [4]

– only 5% of blogs concerned business at all[4] (compared to 8% corporate and 13% entrepreneurial blogs in 2014[5])

– 8% bloggers made any money through their blog[4] (compare today’s 17% of bloggers who earn full-time income[6])

– making money from a website almost exclusively meant displaying banner ads; blog content marketing, affiliate marketing, video ads, subscription services, membership sites, and digital products did not exist as they do today

– Youtube was less than a year old and was just being bought by Google [7]

– the concept of vlogging was in its infancy, and enterpreneurs using online video as a platform did not exist

– digital music distribution was only 3 years old and was restricted to Apple [8]

– one year before the Kindle’s debut, the e-book market was non-existent [9]

– e-learning solutions, and online courses did not exist in the sense they do today

– the concept of crowdfunding would not kick off for another 2 years [10]

– one-click digital shopping cart solutions did not exist

– digital sales solutions easily accessible and widely available for entrepreneurs did not exist
– it was not commonplace for users to buy digital products directly from entrepreneurs and small businesses
– the concept of apps for phones would not exist for another 2 years (the iPhone itself would not debut for another year)
– purchasing on mobile devices was limited to polyphonic ringtones

BOTTOM LINE
In 2006, the digital products and services that entrepreneurs sell today did not exist.

The concept of entrepreneurs selling digital products directly to their consumers without third parties did not exist.

The concept of digital microbusinesses did not exist.

The above list could go on for a long time.

A 2006 regulation is not suitable for the 2015 internet landscape.

A 2006 regulation is not suitable for digital microbusinesses.

REFERENCES
[1] International Telecommunications Union statistics, http://bit.ly/1tcwY1P
[2] ITU statistics, http://bit.ly/1CpMd9p
[3] One of many papers defining web 2.0 by Catherine Styles, http://bit.ly/1JoHzdW
[4] Pew Internet & American Life Project, http://pewrsr.ch/1C0C30n
[5] Blogconomy Stats 2014, http://bit.ly/1iTeC0H
[6] Lifehacker, 2014 http://bit.ly/1iebTdk
[7] http://nbcnews.to/1CpMoBF
[8] Natalie Klym, MIT, 2005, http://bit.ly/1BpUGYU
[9] T.D. Wilson, Information Research, 2014, http://bit.ly/15BL4it
[10] Freedman and Nutting, 2015, http://bit.ly/1pM6JqI
[11] European Commission, 2009, http://bit.ly/1LajYzw
[12] European B2C Consumer Report, 2014, http://bit.ly/1r5H3rV

Should HMRC and HM Treasury be the ones explaining themselves in court?

Let’s have a look at the Tax Information and Impact Notes published in December 2013, signed off by David Gauke, Financial Secretary to the Treasury, specifically relating to this particular area of indirect tax.

Now, there are all sorts of holes to be ripped in this particular document and its reasoning, by far better qualified folk than me. Meantime, two things catch my eye in the section dealing with VAT: place of supply and the introduction of the Mini-One Stop Shop starting p.133 of that document.

Equalities impacts. The Government has no information about the protected equality groups of any individuals who may be affected but no specific impacts have been identified for any protected equalities group.

Really? Absence of evidence is not evidence of absence and the point’s been made time and again that the smallest online businesses are a way out of benefits for the housebound, carers, the retired and the disabled. Not to mention the unemployed, who Job Centres actively encourage to use their skills to go self-employed. Using digital skills is one realistic way to do that because you can set up a business investing time instead of money.

It also doesn’t look like HMRC have learned anything from the legal judgement that’s already gone against them, as reported here, stating that mandatory online VAT filing is breach of taxpayers’ human rights. There were no exemptions for those who found online filing difficult, for any reason.

I’m guessing their first argument here would be that anyone running an online business must self-evidently be computer literate. But there’s a world of difference between running a small online business using a free plug-in to enable downloads alongside a PayPal ‘Buy Now’ button and having to manage a e-commerce system fully integrated with PayPal’s API, with all the costs that entails – and that’s before we get on to the record keeping and reporting issues.

Did HMRC ever actually look into any of this beyond making the most superficial assumptions?

Then there’s the final note on ‘Other Impacts’.

Small and micro business assessment: small businesses that provide e-services direct to customers in other member states may incur additional costs, although these are expected to be partially mitigated by MOSS.
Businesses currently unregistered in the UK who choose to register for MOSS in the UK will also have to obtain a UK VAT registration and their UK supplies will therefore also become liable to VAT.
Other impacts have been considered and none have been identified.

Really? None? I really would dearly love to see the people who set all this up explaining in court just how they went about considering other impacts and how exactly none have been identified!

And those costs little businesses may incur which are expected to be partially mitigated? How about that for vague and conditional language? Was there any actual research done here? With actual y’know, numbers? And where and who exactly did this information come from?

Because we know full well they didn’t even go as far as consulting, let alone notifying the UK’s 370,000+ registered sole traders. That’s registered with HMRC so it’s not as if they had far to go to find out who they were and there are already systems in place for notifying them of tax changes!

Well, I am not a lawyer, nor anything close, and sadly I don’t have the funds to pay anyone who is to launch any legal challenge along these lines.

So we have to carry on challenging this appallingly flawed legislation in letters to our MPs and MEPs.

And as far as that HMRC and HM Treasury impact assessment goes? You can use this particular website to register your own disapproval of David Gauke offering this appallingly complacent and ill-informed document as an answer David Morris’s written question of 19th January, asking for a comparative assessment of the level of administrative burden the EU VAT place of supply rules places on (a) micro businesses and sole traders and (b) large multinational companies.

Click through and look at the right hand side of the page. Does this answer the above question? If you don’t think so, click on ‘NO!’