HMRC have announced two areas of help for small businesses supplying digital services to EU consumers.

The announcement concerns businesses trading below the UK’s VAT registration threshold (currently £82,000) that make supplies of telecommunications, broadcasting or electronically supplied services to consumers in other EU member states. 

Where your customer is based

The first announcement is a simplification to allow businesses to exercise their best judgment when determining where their customer belongs. This means they can now rely on any single piece of information such as an address to determine the location of their customer.

Until now, the general rule had been to collect two non-contradictory pieces of evidence confirming their customer’s location, although smaller businesses were allowed to rely on one piece of evidence from their payment service provider.

Business activity

The second announcement is a reminder for people to check whether they are actually in business for VAT purposes before starting to submit VAT Mini One Stop Shop (MOSS) returns.  If an activity is a hobby and a person is not acting in the course of business, registration under MOSS will not be required.

Got a query?

The business test for VAT purposes is quite detailed and needs to be applied to the specific facts and circumstances of each person. If you need guidance on whether or not your activities qualify as a business for VAT purposes, please get in touch with a member of the VAT team here. In the meantime, for further information please read the Revenue & Customs Brief 4/2016.