A couple of updates since my previous post:
- HMRC held a Q&A session on Twitter about the 2015 VAT changes. Here’s a transcript. It clarifies a lot. (I like the terse style enforced by Twitter for these answers, but some are also usefully expanded on at the end of the transcript.)
- The digital delivery company I currently use, SendOwl, posted an excellent explanation of how they understand the rule changes and what they’re going to do to support people affected by them. It’s particularly noteworthy that they are expecting to handle the 10-year customer data retention problem as well as identifying the right VAT rate for the customer’s location. I am provisionally impressed.
What am I going to do for my own little company?
I sell three sorts of things:
- Developer licences for software libraries.
- Mac apps, both through the Apple app store and as direct sales.
- Windows desktop apps. These are listed on the Windows 8 Store, but it only has a link; the sale is direct.
For developer licences, I could avoid the problem by switching (back) to manual fulfilment—emailing the licence instead of completing the transaction online. The HMRC Q&A made clear that this would be enough to avoid a transaction being classified as a digital one. These sales are infrequent enough and of high enough value to make the extra work acceptable.
The Mac apps sold through the Apple app store are unaffected: Apple is the vendor and handles the VAT.
The direct sales of apps are the problem. Those of Windows desktop apps are especially a problem, because at least the Mac ones are also available in the app store. I sell very few Windows desktop apps, far too few to justify the extra work. The rational thing would be to drop them.
I don’t think I’m going to do that though, because this isn’t a very rational business—as much as anything it’s driven by a feeling that I ought to keep in touch with how software is delivered in the real world, with a vague hope that this can make me a better and more pragmatic developer in general. Or less positively, by stubbornness and pique.
So instead I’m going to get the business VAT-registered, for all its pathetically tiny income, and play along.
Update: Moments after posting this, I found this article: Meeting with HMRC and Treasury. It says, among other things, “The details on how to join VAT-MOSS without losing your UK VAT threshold will be out next week. From the initial comments it sounds pretty sensible and workable.” So I may wait-and-see a little longer.
Another update: HMRC published their suggested workaround: it doesn’t look useful. It amounts to registering for VAT anyway, using the VAT MOSS system for EU trade, and filing quarterly UK returns as normal but with zero VAT listed. It is only available if you give your primary business as “digital services” when registering for VAT. This doesn’t seem much of a simplification—you still have to track EU vs non-EU transactions even if it’s only to remove some of them from the “VAT stream”. So, I’ve submitted my VAT registration and will, at least initially, try doing the full whack.