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New service developed for UK digital service suppliers to register for VAT

Suppliers of digital services will be able to make a single payment of the VAT they owe for the services provided across the whole of the EU using a single mechanism developed by HM Revenue and Customs (HMRC) from next year.10 Jun 2014

HMRC has developed an optional 'VAT mini one stop shop' (VAT MOSS) online service in response to changes to the way the tax system will operate from 1 January 2015.

From next year, businesses supplying consumers with digital services, from providers of telecoms services to online subscription-access publishers and streaming service providers, will be required to pay VAT on those services based on where the consumers receiving those services live or are located. The changes are laid out under the new EU VAT Directive which member states must implement before the end of 2014. Guidance on the changes was published earlier this year.

However, to avoid businesses having to use a number of different systems for paying the tax to comply with the 'point of consumption' regime, EU member states have been developing tools to allow businesses to register for VAT only once. VAT MOSS is the system developed in the UK. As many as 42,000 UK businesses are expected to register with the service, HMRC said.

"The VAT MOSS is a tool that saves digital services suppliers from having to register for VAT in every member state in which they sell such services," Sally Beggs, deputy director of indirect tax at HMRC said. "Businesses with their main operation or headquarters in the UK will register with HMRC to use the service. They can register for the online service and then authorise an agent to act on their behalf."

HMRC said that businesses will be able to register for VAT MOSS from this October and will be available to use from 1 January.

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Our indirect tax team combines the expertise and experience of lawyers, tax advisers, accountants, former in-house heads of indirect tax and ex HMRC officers. From such a broad pool we are able to offer advice which is bespoke, accurate and commercially aware.

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