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VATMOSS Update

VATMOSS Update
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VATMOSS update time I think! My Facebook newsfeed is currently full of updates on this hot topic. Now that the full implications of the legislation have had time to sink in, I am faced with the sobering thought of just how much could be changing in two weeks’ time. I have in fact just been reading a highly entertaining blog that really brings home how much will be affected. I think it is fair to say that a lot of people who don’t run download businesses or don’t live in the EU are not paying that much attention to this because it seems like ‘it’s not a problem for me’ and after all, there are a lot more tragic things going on in the world right now, plus Christmas is almost upon us and it’s pretty hard to think beyond Christmas. Unfortunately, as that blog brings home, this is going to affect everyone who has anything to do with the download industry. If you live in the EU and use any downloads at all – this includes things like WordPress, Dropbox and your ebooks, you are going to feel the impact in 2015. People tend to assume that because a product has a good brand (like those I’ve just mentioned), it must be made by a large company. In actual fact, much of WordPress runs on add-ons developed by individuals. A lot of these have free options which of course won’t be affected by the new laws…or will they? Those individual developers don’t just live on air while they program these great add-ons. They may also be selling upgrades or ‘all-singing, all-dancing’ versions which will be affected. So what happens to these? Do the developers stop selling them shut up shop and your free programs disappear? Are these individuals not based in the EU and do they decide to just stop supplying to the EU? I am already reading reports of countries outside the EU stating that, from 1st January, they will no longer be selling downloads to the EU due to the new VAT laws. If you live in the EU, there are anti-discrimination laws in place that will prevent this strategy, so don’t even think about that, tempting though it might be!

I am also reading hundreds of stories from people who, like me, are living with health problems that prevent them from working a conventional job. Like me, they are able to do some work, it just needs to be more flexibly arranged than any company is likely to manage. These people do not want to be reliant on the benefits system, so they are using their initiative and using the skills they had acquired in whatever previous jobs they did, to find niche markets to supply. Like me, these people are not making millions from their enterprise: most are barely scraping by. Then there are the stay-at-home-Mums who are trying to find that elusive life balance that enables them to be good Mums and also earn some money of their own or retain the skills they will need to re-enter the workplace in the future. These are the people who have been banding together on social media to raise awareness and fight this issue together. Together, the group has built a fantastic source of information as individuals share useful articles, share what they are doing to campaign and share the results of those campaigns. So I am benefitting from a constant stream of VATMOSS update news, plus a feeling of shared support.

The current VATMOSS update as I write this blog consists of the following: a very disappointing reply from Vince Cable to the petition directed to him. It seems clear to me that he has no intention of actually doing anything other than reiterating his mistaken belief that this will affect very few businesses as ‘all micro-businesses sell their downloads through third parties who will be dealing with the VAT on their behalf’. I find it maddening, although not surprising, that the government built a set of laws on the back of an evident lack of understanding of the industries those laws will affect. I can sort of understand that kind of mistake being made: the very fact that we are all sole traders, not VAT registered etc, of course means that it’s hard to come by statistics for us. Governments only work on statistics, so I can see how the errors came about. There is really no excuse however, other than lack of care, for failing to look at the issue when the mistakes have been pointed out. Aside from the number of micro-businesses who do not sell through third parties, those that do are now finding that the third parties they use are not always planning to comply with the government’s plans. As I feared (see my last VATMOSS blog), Etsy has so far stated only that it is looking into the issue, but seems to be heading towards the stance that it’s not going to be responsible for the VAT on downloads. I have also read that Google Helpouts have just updated their conditions of service to state that consumers from the EU may only use free downloads, while providers based in the UK and Ireland may only offer free downloads.

The second VATMOSS update consists of a modification of the rules by HMRC to state that UK businesses who fall below the UK VAT threshold of £81,000 may register for VATMOSS without also having to become UK VAT registered. So this is good news as at least it preserves our pricing structures within the UK. The problem that has still not been addressed is the issue of the data we are supposed to collect in order to become VATMOSS compliant. Namely, two non-conflicting pieces of evidence to prove the location of the customer. Firstly, most online payment facilitators (eg Paypal) do not collect this data and have stated that they do not intend to do so. Secondly, even if I can manage to collect the data, I have to store it for ten years just in case I am investigated by the VAT authorities in any of the EU member states. Data protection laws create another minefield of administration that I would then have to negotiate, costing me yet more time and money, which I simply do not have.

So, for the moment, I plan to sell my patterns as physical goods that will be emailed to you manually from January 1st. I am glad that this will give me the chance to interact more with all of you as I am hugely grateful for the support of everyone who buys from me and I like to be able to say ‘thank you’. However, this is taking a giant technological leap backwards and it is of course much less convenient for anyone who just wants to get on with that beading project. It may also just be a temporary fix as, at the moment, the new VAT rules are due to be applied to physical goods sold in the EU as well as downloads from 2016. I know that the campaigning will continue, so I am hoping that something can still be done. If you can lend your support by signing either the petition above or a new EU wide petition that can be found here, then please do so. Please also share these petitions for others to sign. I have a sneaking suspicion that the new laws will not work out quite the way the EU policymakers intend, so perhaps we will see them actually starting to listen in 2015, but that doesn’t solve the problem for the millions of people who will be affected worldwide on 1st January. Stay tuned here though as there will be another VATMOSS update when I have more news…the situation is changing all the time!

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