Tag Archives: updates

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!

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Talis Kimberley tackles Vince Cable and the Federation of Small Businesses.

So, the new legislation is here and proving to be the unworkable shambles we all knew it would be. You can find a full report on that over at the EU VAT Action website.

We’re keeping up the pressure, relaying all the evidence we gather to MPs, MEPs and the relevant EU Commission departments.

Talis Kimberley with her other hat on, as Talis Kimberley Fairbourn, Green Party parliamentary candidate for South Swindon* has done sterling work on everyone’s behalf!

“Yesterday I had the opportunity to ask a Senior Government Minister a question on small businesses, at an FSB event (I’m a member but haven’t engaged with them before). Turned out it was Vince Cable.

Now, not being shy, I sat there in the front middle seat right in front of him (Green Party badge on my shoulder as is my habit) and stuck up my hand when they asked for questions… got picked first, out of only about seven or eight questions for which there was time, so I’m glad I didn’t wait. Here’s what I asked:

‘Minister, you’ve spoken of working to create a good tax environment for businesses, and of tackling red tape.

What will you do to reinstate the much-needed threshold lost by online micro-businesses under the new, and chronically under-communicated VAT rules on where the tax is levied – rules which place an intolerable administrative burden on tiny sole traders and digital creative businesses, rules which other EU countries are implementing unevenly and which countries beyond the EU are largely ignoring as unenforceable, further disadvantaging UK digital businesses, and making a nonsense of your stated intent to support online commerce and small businesses generally?’

His reply was largely along the lines that Britain is doing really well with online businesses, and that he’s not a tax expert. He did say he was going to Brussels ‘to see about this’, and I have contacted my local Green MEP Molly Scott Cato in case it’s appropriate for them to liaise, as she’s been involved in raising this in Brussels herself. The Minister concluded “VAT is a current problem whether you’re digital or not” to which I muttered that it hadn’t been a problem for many of us until this change… but without a right of reply as such, I sat and looked unimpressed at him, scribbling notes.

However, at the end of the session, he approached me at once and said ‘I’m aware that I didn’t answer your question, may I have your particulars?’ so I gave him my card… let’s see what happens. I’ll keep you posted.’

More news on that as we get it!

Please continue to do what you can – and don’t take the first reply you get to a letter as any kind of final answer. I got the standard brush-off/HMRC-cut-and-paste reply from my MEP Catherine Bearder – and was so annoyed I fired back a polite but no holds barred take down of their worthless reassurances. Since then she’s got back to me with a much more informed response plus a list of the actions she’s taking to get this issue investigated properly in Whitehall and in Brussels.

For any of you in London, MEP Syed Kamall is looking for case studies – actual examples of the problems people are having.

* I mention this in the interests of full disclosure. This isn’t a party political issue after all – Syed Kamall and Vicky Ford are both Conservative MEPs and Catherine Bearder’s a Lib Dem. Other folk report getting similarly better informed responses from Labour MPs and MEPs – when they’ve answered an initial brush off with hard facts and figures.

January 2015 – where we are and where we’re going

So here we are, with everyone fully back to work after the Christmas and New Year break. And how are things with the new VAT regime?

Well, here’s Cheryl Morgan of Wizard’s Tower Press explaining just how awkward and time-consuming the so-called simple solution of using 3rd party vendors can actually be in reality.

As well as costing us that hefty and non-negotiable slice of income for the privilege. Oh, and let’s not forget that revenues from those third party sites are paid through anything from a month to six weeks after the actual customer has made their purchase. Whereas direct sales mean direct income!

A lot of people remain unaware of all this – which is hardly their fault, given how badly communicating all this has been handled by HMRC. Something that’s making folk sit up and take notice is finding US sites they’ve been happily using are now barring sales to the EU completely.

If you come across someone thinking this is just a knee-jerk response along the lines of ‘no taxation without representation’, here’s a blogpost from Carolyn Jewel explaining how it is IMPOSSIBLE for her to continue selling ebooks anywhere in the EU through Nook.

So while some providers such as Bandcamp have made heroic, eleventh hour efforts to enable their users to comply, and HMRC have shifted their ground over issues such as customer location evidence, it’s still very much apparent that this legislation is fundamentally unfit for purpose.

Accordingly the EU VAT Action team have been discussing our new focus for this new year. You can read the full update here.

In summary – The 2015 campaign aims are:
Short-term: to obtain a fair and reasonable exemption threshold, to apply worldwide

Short-medium-term: to work with the key EU decision-makers to review this legislation from the ground up, reworking it to be practical, fair and reasonable, even for the smallest companies

Long-term: to work at a global level to ensure that the other countries who are bringing in similar place of supply VAT legislation learn from the experiences we are having in the EU and avoid repeating the same mistakes.

Sounds simple, eh? Well, in some ways it is. This is so demonstrably legislation that’s wholly unfit for purpose.

What will make all the difference to the EU VAT Action Team being heard is being able to show just how many people we are speaking for. The EU VAT Action website lists a whole lot of ways you can add your voice.

If we are to see meaningful change at an EU level, we need to have sustained campaigns in as many EU member states as possible. Please do all you can to spread the word to family, friends and colleagues across Europe.

Letters to the Editors – Let’s get this story into the newspapers!

We’ve had some useful coverage here and there, mainly in business pages, as well as seeing some unfortunately less well informed stories. Now that Christmas is over, let’s make a concerted effort to push this up the news agenda.

We’ve already made a start, thanks to Isabel Zinaburg, Rosie Slosek and Beth MumblesMummies talking to The Daily Mail this week – and whatever you may personally think of The Daily Mail, it has a massive readership and that’s the reach we need. Here’s the article.

Now let’s target the opinion pages. A few thousand letters on the same subject should get the editors’ attention as everyone comes back to work after Christmas. Let’s fill their inboxes over the weekend, to make them sit up and pay attention on Monday morning.

Don’t try to explain it all. These letters need to be short and focused; a couple or three paragraphs at most, and as an email, not an attachment. With enough people writing, the papers will get the full picture.

Concentrate on the most important aspects to you individually. Such as –

Disruption, even ruin, of your business plans for 2015.

Loss of revenue if you’re cutting digital products completely.

Loss of revenue if you’re abandoning direct sales and being forced into using 3rd party suppliers.

Make the point that it’s Amazon, Google and Apple who’ll benefit from that.

Additional costs if you’re paying for enhanced online payment solutions and/or accountancy services in order to comply.

What that means if your digital earnings make the difference between claiming benefits or not.

What that means if your margins are already so tight, this could very well put you out of business.

How the zero threshold means imposing an appalling burden on the smallest businesses, out of all proportion to their resources, and to the revenue that the scheme will bring in.

How late you found out about it all– and at such an impossible time of year for dealing with things like this.

Loss of hours of precious time with your family over the holiday season, as well as the stress of trying to tackle all this.

How late so many of the platforms vital to e-commerce found out about this, such as Bandcamp, Ravelry, Etsy.

How some platforms are trying to help and how others refuse to be forced into doing so.

How utterly lacking consultation and communication has been, with so many folk only finding out by accident, through social media.

How confusing and changeable HMRC’s advice has been.

How HMRC and Treasury, as well as the EU Commission, clearly have no idea how much small scale e-commerce goes on, never mind how it actually works.

What all this means for customers, as prices go up and choice goes down, especially with US sellers increasingly opting to block sales to the entire EU just to avoid this mess.

Remember, just pick a couple of these points. Make your letter passionate and personal!

Letters for publication in The Guardian should be sent to guardian.letters@theguardian.com letters for publication in The Observer should be sent to observer.letters@observer.co.uk

They say – “We do not publish letters where only an email address is supplied; please include a full postal address, a reference to the article and a daytime telephone number. We may edit letters. Submission and publication of all letters is subject to our terms and conditions.”

(Those T&Cs are essentially you’re granting them a license to use the letter in print, online etc, edited if they wish. Plus don’t be obscene or defamatory or infringe intellectual property rights.)

Letters to the Daily Telegraph, Sunday Telegraph and Telegraph.co.uk should be sent to dtletters@telegraph.co.uk (Daily Telegraph) or stletters@telegraph.co.uk (Sunday Telegraph). Please include name, address, and work and home telephone numbers.

Daily Mail – Send letters to the Editor at letters@dailymail.co.uk They don’t stipulate adding your name, postal address and phone number but since every other paper does, I’d recommend doing so.
You might like to start by thanking Louise Eccles for her story raising awareness about this, since you feel so strongly that the public really need to know what’s going on 

The Independent – E-mail (no attachments), giving postal address and telephone number, to letters@independent.co.uk

You’ll notice I haven’t included The Times, The Sunday Times or The Financial Times. That’s because they’re all behind pay walls online, so that information’s not immediately accessible to me, and similarly any letters that got published wouldn’t be linkable for social media purposes.

That said, if you are an online subscriber, please do write to any or all of these papers. If you can help by posting their contact details in a comment, by all means do so.

A little movement from HMRC to potentially help some businesses. So now we press for more.

Here’s the latest from EU VAT Action . The key development is this –

Basically HMRC has agreed that, for those in the UK below the VAT threshold, you can use the PayPal (or equivalent) country code as your evidence for proof of place of supply until the end of June.This is an enormous achievement, due to the thousands of people who have taken action in this campaign, so thank you!

It’s not perfect. It doesn’t fix the rest of the problems. To be honest (see below) HMRC themselves can’t fix most of those. But it WILL allow more people to keep trading, while we all negotiate a reworking of the rules and a sensible threshold.

Here’s the text:
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

So this is a move by HMRC which will potentially help some of those digital businesses which might otherwise have to close on 31st December. Because HMRC have finally recognised how massively wrong the assumptions underpinning this legislation have been, and what a horrendous mess they now face. That much is progress.

That said, this tweak is by no means a solution. If it’s meaningless in your particular context, write and say so. Make it quite clear that tinkering around the edges isn’t going to make this headache go away.

EU VAT Action will absolutely continue campaigning until a workable system is devised with thresholds that recognise the levels of turnover below which the administrative burdens of compliance are impossible for a small trader and where the costs for the tax authorities outstrip any potential revenues.

So , please keep on sending your letters and emails to convince the powers that be, in Whitehall and Brussels, that review and revision of this legislation is essential, from the ground up. Every time you see a news story about the UK or EU economy, use that as a prompt for a fresh round of protests!

This past week, we’ve seen newspaper and BBC stories about worse than expected UK deficit figures. So why not contact George Osborne and point out that putting tens of thousands of small traders out of work really isn’t going to help with this, never mind all those rest of the world sellers whose response to VATMOSS is simply to cut off all digital commerce with the UK and EU.

Any UK citizen can do that in his capacity as Chancellor by e-mailing public.enquiries@hm-treasury.gov.uk, telephoning 020 7270 5000 or writing to The Correspondence & Enquiry Unit, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ.

According to Environment Secretary Liz Truss, the countryside is to drive UK startups with superfast internet through 2015. I really do think she deserves a flurry of letters pointing out precisely how VATMOSS dooms that hope to failure.

To lobby her as Secretary of State for Environment, Food and Rural Affairs, please contact Defra directly. Write to: Defra, Nobel House, 17 Smith Square, London, SW1P 3JR Email: defra.helpline@defra.gsi.gov.uk Telephone: 0345 9 33 55 77

We have to create a climate for change as soon as possible in 2015

The latest update from EU VAT Action is here.

It’s long, it’s detailed and it’s important for several reasons which I’ll attempt to summarise here since I know how busy everyone is at the moment. (Then I’ll go and try to salvage something from the wreckage of my own pre-Christmas To Do List…)

We are being heard in the UK. We are finally getting the message through. If that doesn’t seem like much, because there’s no sign of a suspension or anything similar so far, do please take a moment to look back and see how far we’ve come. A month ago HMRC and Treasury were convinced that everything would be fine, no problems at all, so the little people really should stop making such a silly fuss, comply or expect to be fined. That’s where we were in November.

There is no time or scope for substantive changes before January 1st. If this wasn’t all happening over Christmas, if we’d a year or even six months to campaign… well, if wishes were horses, beggars would ride. We are where we are, and yes, we are all as angry about this as you are.

What we can now see are several opportunities for arguing our case in early 2015, here and in Brussels. And the public outcry so far means that EU VAT Action is now assured of a seat at the table for those meetings. Yes, really.

The more outcry there is, here and in Europe, the more weight our words will carry. The more leverage we’ll have. Will we succeed? Who knows but we’re giving it our very, very best shot.

You can help by giving us evidence. If you haven’t already done so, please complete the survey.

Tell as many people about the survey as you can. Especially any contacts you have in Europe.

Write letters to your MEPs and explicitly ask them to lobby Pierre Moscovici for reform on your behalf. Point out that the simplest and easiest solution is a turnover threshold.

All emails should be cc to
Pierre Moscovici – pierre.moscovici@ec.europa.eu
Andrus Ansip – CAB-ANSIP-WEB@ec.europa.eu
Donato Raponi – Donato.Raponi@ec.europa.eu

Use their own words against them.
Mention this OECD report of 18th January, especially Page 18, para 17

Jurisdictions should aim to implement a registration-based collection mechanism for business-to-consumer supplies of services and intangibles by non-resident suppliers, without creating compliance and administrative burdens that are disproportionate to the revenues involved or to the objective of achieving neutrality between domestic and foreign suppliers

Rip holes in Andrus Ansip’s Blog on #EUVAT
Point out how all this makes a mockery of Commission President Juncker’s supposed support for the Digital Single Market.

Make this personal and back that up with hard facts and figures.
If you’re being put out of business, say so. Say what this means by way of lost income and lost investment of time and money.
If you’re only able to carry on with an appalling new administrative burden, say so, and spell out exactly what that’s costing you in additional paid-for services and time.
If your only option is using 3rd party platforms, say so, and let them know what that means in lost revenue.
If you’re moving your digital business base of opeations out of the EU, say so – and point out how easy that is to do with digital services.

Write another letter at the end of January, saying how your month has gone. Another at the end of February, if we haven’t seen any meaningful change by then.

Write to your MPs and now it’s time to make this political.
Make it plain that you expect them to take action to support the smallest business sector.
Copy that letter to the head of the local political party who’s selected and endorsed your MP.
There’s an election coming. Point out how the only people who’ll make political capital out of this will be UKIP and other extremists.

The more voices, the better our chances of being heard.

We’ve made the EU take notice. Now we must make them take action – and fast.

Today’s been another day of long and intense conversations. Clare Josa of EU VAT Action has been on the phone to Brussels on everyone’s behalf, bolstered by information and analysis from any number of informed sources as people work to nail the key issues here.

That Twitterstorm worked. Key EU Commission staffers are now fully aware of this imminent catastrophe and finally realise just how woefully misplaced all that ‘trust’ and ‘confidence’ has been, in 3rd party market places and payment providers taking on all the burden of compliance with all these rules.

So that message has got through. Now we have to convince them to act, and to act fast, to prevent small scale e-commerce traders shutting up shop on December 31st. That means generating the political will in all 28 member states to see the sense in quick agreement on short term solutions to keep people in business, as well as a firm commitment to reviewing the most problematic aspects of this legislation as soon as possible in the New Year.

Once again, this is where you all come in, plus friends, family, colleagues, especially those across the EU. Word of this is beginning to spread in Europe but thus far, still slowly. So the more you can do to boost the signal, the better. We need MEPs and national MPs in all member states finding a surge of email about this in their inboxes tomorrow and on Friday.

To make sure that the key EU players see all that in action, all emails should be cc to
Pierre Moscovici – pierre.moscovici@ec.europa.eu
Andrus Ansip – CAB-ANSIP-WEB@ec.europa.eu
Donato Raponi – Donato.Raponi@ec.europa.eu

Emails should also go to the Treasury in the UK, and the equivalent in other EU member states. If you can find out who the Fiscal Attache to the EU is in your country, that would be ideal. W’re currently looking for that information over at EU VAT Action. For the time being in the UK, send your emails to public.enquiries@hm-treasury.gsi.gov.uk. Please cc your email to David Gauke – gauked@parliament.uk

Explain –

1. The specific problems / challenges that the new EU VAT law has caused for you.
2. What actions are you taking? What is impossible for you to do.
3. What is the financial and human cost of this for you.

If you’re willing to be used as a case study, also cc your letter to euvataction@gmail.com

And once again, thank you for all you’re doing.