The impact on VAT MOSS of Brexit

The VAT Mini One Stop Shop – commonly referred to as VAT MOSS – was introduced in January 2015 when the rules surrounding the supply of business to consumer (B2C) digital services within the EU changed. The key change was that, for non-business telecommunication customers, the country where the customer is located became the place of supply.

This means that businesses based in the UK that supply digital services now have to charge non-business customers using the VAT regulations of the EU member state where the customer is based. The online VAT MOSS service was created by HMRC to make it easier for these UK businesses to do this, saving them from having to complete VAT registration in every EU country where they have customers.

There are worries that this system will potentially be thrown into disarray following the result of June’s EU referendum. Of course, until Article 50 is invoked, complying with MOSS must continue as normal. The online portal will continue to be active until the formal process of the UK leaving the EU begins.

The EU VAT Action Campaign has been working since before the Brexit vote to forge a route forward, getting the OECD to formally acknowledge that both simplifications for businesses and a MOSS threshold for microtraders are needed. The problem the campaign foresees is that these issues will not be taken seriously thanks to impending Brexit.

The proposed new measures will most likely be proposed at the end of the year, and could take up to three years to become implemented from that point. The campaign fears that the OECD’s acknowledgement will now carry less weight, and that they will be seen as UK-only issues as the UK has been most vocal about them.

In an attempt to counter this, the OECD has tasked the campaign to submit a white paper to provide evidence on the issues it has raised. In order to do this, the campaign has requested detailed and specific evidence via its website from traders outside the UK which have been affected. This evidence could prove vital in ensuring the European Commission doesn’t dismiss the results of the work the campaign has carried out as simply the UK trying to cause problems as it skulks out of the EU.

Taking this attitude could in turn cause further problems if the EC’s technocrats overlook the practical issues of MOSS for emotional reasons, rather than looking at how the system can be improved.