In terms of how much they think it will cost them to prepare and comply with the changes, over 40% of larger businesses expected it would be more than £50,000 but 27% of all businesses had no idea how much it would cost. Commenting on the report, Amanda Tickel, partner at KPMG, stated: “The new VAT rules mean affected companies face an increased compliance burden and billing becomes more difficult to manage. In the first instance, businesses need to ensure their systems can capture the right sort of information to evidence where each customer lives and apply the correct VAT rate. Coupled with this, those affected urgently need to decide how they’ll report and pay the VAT.”
One way of simplifying the process is to sign up the the Mini One Stop Shop (MOSS) scheme which allows businesses to submit returns and pay the relevant VAT due to member states through the web portal of one member state rather than register and submit returns to every member state they sell services to. Details can be found at the Revenue website. Companies that sign up will need to submit quarterly VAT returns electronically with details of their supplies of the listed services – and the VAT due.
Even with the “simplification” provided by MOSS, the process does seem far more cumbersome than the current arrangement. Admittedly, it will help to level the playing field with large sellers exploiting the low VAT rate in territories like Luxembourg but it comes at the cost of increased prices for customers along with additional bureaucracy and administration for all suppliers. Outsiders might be forgiven for wondering if a harmonisation of VAT rates across EU member states would make things clearer, more consistent and less cumbersome for customers and suppliers alike.
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