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VAT & Online Trading

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Advising on the numerous VAT issues and opportunities facing online retailers and service providers, not least the significant changes that have recently arisen for UK/EU transactions.

Special VAT Rules for Retail Goods

 

UK VAT is no longer chargeable on goods shipped to EU customers. It may however be necessary for UK suppliers to register for EU VAT, although this might not be a requirement for some businesses selling through online marketplaces. 

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Online Service Providers

The VAT rules for online services are complex and although UK businesses are often liable to pay UK VAT on services provided to EU consumers, it is also possible that an EU VAT registration will be required. It is no longer possible to account for EU VAT via an HMRC portal, although there is now an EU ‘One Stop Shop’ VAT registration process available to UK businesses. We can help you understand the rules and meet compliance requirements as appropriate.

 

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VAT & Retail Promotions

Retailers/online sellers regularly use promotions to attract customers, and there may be opportunities to make VAT adjustments where discounts, vouchers, or other promotions are used. It may also be possible to obtain retrospective VAT refunds where adjustments have not been previously made. 

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Case Study

VAT & Online Trading

Special VAT Rules for Retail Goods

Online bookseller’s life just got complicated

Intro

Our client operated as an online seller specialising in books, guides, and maps. Due to their sales to EU consumers and the typically low value of their consignments, they found themselves obligated to register for VAT within the EU.

Issue

While many of their products were zero-rated in the UK, such as books, VAT applied to these items in numerous EU countries.

How we solved it

We advised our client on how to obtain a One Stop Shop EU VAT registration number and confirmed the VAT rate that applied to their products in each EU country that they sold into. 

The Outcome

The client was able to plan and ensure that their pricing recognised the additional VAT charge that would apply in many EU countries.

Online Service Providers

VAT on Music Streaming Service

Intro

Our client was a provider of online music streaming services, with a focus on the broadcast of DJ sets and ‘educational sessions’.

Issue

Because the client provided a mix of live content and prerecorded content, the VAT position wasn’t as straightforward as it might have been, and the client was concerned that they would have the liability to register for VAT in multiple jurisdictions.

How we solved it

We reviewed the client’s service offering and advised them on how VAT would apply in the UK, the EU and elsewhere.

The outcome

The client was able to move forward with its business in the knowledge that it was only liable to register for VAT in the UK and the EU (via a One Stop Shop VAT registration)

VAT & Retail Promotions

Price not adjusted for vouchers

Intro

Our retail client issued vouchers for redemption in-store.

Issue

The client did not keep a proper record of redemptions the risk was that the client accounted for more VAT than they needed!

How we solved it

We examined the voucher issuance and redemption process and helped the client pinpoint transactions where no VAT adjustment had been made, even though a voucher had been redeemed (so the full price was not ultimately paid).

The Outcome

As a result the client made a claim to HMRC for a refund of the VAT that they had overpaid.

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