UK VAT Laws to Change to Support Online Sellers

VAT MOSS Changes affecting online retailers

With all eyes on Theresa May securing a Brexit deal for the British people, it looks like the first change within the UK VAT legislation is a change to support non-EU businesses. Ok, it also effects UK businesses but the irony is not lost. These changes relate to the VAT Mini One Stop Shop (MOSS) scheme, with two changes to the rules coming into effect from 1 January 2019. The VAT MOSS changes are being made throughout the EU and are the first part of a package agreed by the EU in December 2017 aimed at improving cross-border e-commerce rules and tackling VAT fraud. The purpose is to ease the administrative burden on businesses making sales of digital services, and to allow a group of businesses currently excluded from the VAT MOSS scheme to access it.

The first of the VAT MOSS changes introduces a de minimis threshold of €10,000 excluding VAT, or the pound equivalent, to the place of supply rules for total annual supplies to the EU of digital services. This change means businesses will only be subject to the VAT rules of their home country if their relevant sales across the EU in a year, as well as the preceding year, fall below this threshold. So, if this applies to you and your total taxable turnover is below the UK VAT registration threshold, currently £85,000, you can de-register from VAT. You can, however, continue to apply the current rules if you choose.

The ICAEW tax faculty has further details of the place of supply rules, when you need to make an election, what information you need to send to HMRC to make an election, and where to send it.

The second change concerns non-EU businesses that are registered for VAT for other purposes. They will be able to use the UK MOSS scheme to account for VAT on sales of digital services to consumers in EU member states provided they are registered for UK VAT for other purposes. This group is currently excluded from using this service.

According to the government approximately 1,200 UK businesses whose supplies of digital services fall below the new €10,000 EU threshold will benefit from the changes to UK VAT law, as will non-EU businesses which are registered for VAT for other purposes.

This simplification may, however, be short lived, according to tax expert Catherine Robins of Pinsent Masons: “If the UK leaves the EU on 29 March 2019 with no deal, government guidance on the implications of a no-deal Brexit says that non-EU businesses – including, by that stage, UK businesses – will only be able to continue to use MOSS if they register for the VAT MOSS non-Union scheme in a country which remains in the EU”.

So still we wait with bated breath to see if Theresa can secure us a deal. Let’s hope she can do so sooner rather than later so that we have at least a bit of time to make plans and implement them.

For further advice on the VAT MOSS changes contact Andrew Coney at

Article by
Andrew Coney

Register for our newsletters to keep up-to-date with the latest tax changes.