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How To Register For The OSS – Get A Quote Today
The biggest ecommerce tax reform of a generation is finally here. As of 1st of July the EU VAT Ecommerce Package will go live and the landscape of European ecommerce will change forever. One of the changes that will have the biggest effect on ecommerce sellers is the new One-Stop-Shop (OSS). You can follow the links to find our overview on the EU VAT Ecommerce Package and our closer look at the OSS, but this article will be focussed on how to register for the OSS to ensure your business keeps running smoothly.
What Is The OSS?
The OSS is essentially the digitalization and simplification of VAT reporting in Europe. The system will allow sellers to record and declare all their VAT due on the supply of goods and services in Europe in one place. This means that sellers will only need to register for VAT in one European country and then declare all their intra-EU sales to that one country. The tax authority will then distribute your payments to the relevant parties.
After they register for the OSS, traders will have to apply the VAT rate of the member state to which the services or goods are supplied.
Union OSS
The Union OSS should be used by taxable persons in the EU who supply services in EU member states other than the one within which they reside or distance selling across the EU.
If you are not established in the EU, you can use the Union OSS for the distance sales of goods within the EU.
Non-Union OSS
This form of the OSS is predominantly for sellers based outside of the EU who wish to offer B2C services in the EU. These services can include the likes of transport and accommodation.
Should You Register?
If you are wondering whether you should register for the OSS, there is a few things you should know. Firstly, there is no longer different distance selling thresholds for each EU member state. Instead, there will be a EU-wide application of a €10,000 distance selling threshold. If your sales exceed this amount in any state you should definitely sign up for the OSS a it will simplify your VAT reporting procedures. Below this amount, you can still sign up (and probably still should) but you may be able to continue using domestic rules for your VAT,
Secondly, you should know that almost all goods and services will be covered by the OSS and the VAT reporting for both will be much simpler than before. Whilst it may take some getting used to, the OSS looks set to really simplify VAT obligations in the EU.
This is especially true if you are a UK seller, as the EU VAT Ecommerce Package will bring the EU’s VAT and ecommerce rules much more inline with the UK’s rules since Brexit.
How To Register For The OSS
Each country in the EU will has got an electronic portal that you can access to sign up for the OSS. You will need to submit an application that will need all the relevant information, such as your VAT number and business registration and address. Once the application is completed the relevant tax authorities will check everything is in order before approving your registration.
You will need to think carefully about which country to register in. If you hold stock in a country, or you have a premises there you will have to remain VAT registered in that country, so it makes sense to register for the OSS with that country.
You should also seek advice about each country’s specific rules surrounding signing up. Some countries, like the Netherlands for example, require you to have a Dutch intermediary and representative to complete the application.
Please be aware if you are registering for the non-union version of the scheme you will be given an individual VAT identification number. This will not be the case if you sign up for the regular union version of the scheme.
Once You’re Registered, What Will Be Required Of You?
Once you are using the scheme, you will be required to collect VAT from your buyer on each transaction. This should be at the rate of the member state where the goods are sent/the services are supplied.
You will then have to collect all the VAT and make quarterly electronic VAT returns to the state which you signed up to the portal with. You should keep these records for ten years.
Conclusion – We Can Help You Register For The OSS
Hopefully, you can see how useful the OSS will be. It will undoubtedly simplify VAT returns for EU distance selling and will mean that ecommerce traders can sell much more freely to the EU. This is especially true of UK sellers following Brexit.
Our long history of working with ecommerce sellers, means we can offer you expert advice – so please do not hesitate to give us a call on or send an e-mail to enquiries@jpaccountant.com. As well as help with the upcoming EU Ecommerce VAT Package and registering you for the OSS, we would be more than happy to file your EU VAT returns, and help you comply with VAT in case your account faces any issues. Get in touch to receive a quote today.
VAT Returns: More Penalties For Failing To Use MTD
Making Tax Digital is one of the most ambitious tax initiatives attempted by the government. By April of next year, almost all business are expected to have integrated some form of digital tax reporting software into their processes. Presently, only businesses who have a turnover greater than £85,000 are expected to have digitized their processes. Whilst these businesses have had plenty of notice, it seems that around 100,000 businesses are still yet to sign up. These businesses will have received letters from the HMRC informing them of their obligations, and now the HMRC are about to give out stricter penalties for those who have still not complied. This article will have a look at what penalties these businesses have not yet signed up for Making Tax Digital can expect and how they can sign up for MTD to avoid these penalties.
What Penalties Will There Be For Failure To Comply With MTD?
As it stands, the current penalty is a fine of up to £400 for failure to use MTD software when submitting VAT returns. So far they’ve actually been pretty lenient with this as they understand that the software signals quite a drastic shift for most users. However, they have made it clear they are going to become far less reluctant to hand out these fines from this point onwards. They have not ruled out increasing these fines.
HMRC are also in the process of trialling closing the online VAT return function to businesses who still haven’t signed up for MTD. In essence, they would be forcing these businesses to sign up for Making Tax Digital in order to file their VAT returns.
This would obviously cause quite a bit of disruption and so at the moment the HMRC are trialling it with 800 businesses to see how well this sanction works. If you find yourself in this situation, you will be prevented from filing returns for July-August and will need to ensure you are signed up in time to submit the return by 7th October.
How To Register For Digital VAT Returns
Businesses who are not yet signed up for MTD can be forgiven since recent reports suggest that less than 15% of accountants completely understand this stage of MTD. This section should you give you a bit more insight on what you need to do in order to sign up for MTD.
Step 1: Get VAT Registered (assuming you’re not already).
Step 2: Get Compatible Software.
There are quite a few options when it comes to this. You can either use software that completes the entire VAT Returns process or just one that takes data from your spreadsheets. You can find a tool which allows you to find compatible software on the GOV website.
Step 3: Get Relevant Information Ready
You’ll need all your relevant information such as National Insurance Number and Unique Taxpayer Reference code. You will also need a Gateway User ID and your latest VAT Return.
Step 4: Complete the application.
You can find the link to the application here.
Using An Agent
You can also use an agent, such as us at J&P, to help you sign up. You will need to provide all the information to your agent and just let us do the rest. We can then file your returns and keep a track of them. The timing’s of your VAT Returns should not be affected and we will inform you as soon as we get confirmation that your return has been digitally submitted.
Conclusion – Get Signed Up For Your VAT Returns
It is imperative that you get your business signed up for MTD as soon as possible if you’re turnover exceed £85,000. Even for those of you who have a lower turnover it is worth considering signing up for MTD early since pretty much all businesses will be required to be signed up by April next year.
If you are still unsure about MTD, you can find our previous article on the topic here.
At J&P Accountants we want to make Making Tax Digital manageable for your business. We can:
- Advise you on the MTD process
- Simplify MTD compliance for your business
- Advise on the best types of MTD software
- Submit VAT returns on your behalf
For advice on Making Tax Digital, please give us a call on or e-mail enquiries@jpaccountant.com. You can also follow us on Facebook, Twitter and LinkedIn.
Bricklink Building The Foundations For VAT Collection
Did you know that Lego is one of the safest investments in the world? Believe it or not, Lego had an average yield of 11% from 1987 to 2015. This meant it out-performed gold and the majority of stocks and bonds. But before you run off to buy a millennium falcon set, you should probably know how Bricklink, the Lego marketplace, has been affected since Brexit. The distributor of the Danish plastic bricks have recently advised sellers and buyers about how it will treat VAT after Brexit now it has implemented its new VAT system.
Why Has There Been A Change?
Since Brexit, Online Market Places operating in the UK have increase tax collecting responsibilities. For B2C sales that are under £135 and are facilitated by a online market place, it is now the responsibility of the marketplace to collect and account for VAT. You can find out more about the changes to online market places after Brexit here.
Bricklink, the platform famous for the sale of Lego, announced in January that it had registered as a market place and would be adjusting its services accordingly. Up until this point Bricklink had advised its customers to proceed as normal whilst they found a way to implement a system for their new responsibilities. However, the company has just announced that it will be rolling out its new VAT system from the 18th of May.
What Can Bricklink Sellers Expect?
Essentially, Bricklink will behave as any other market place. For any transactions made to UK addresses which equate to or less than £135, it will be the responsibility of Bricklink to collect the VAT. This will be reflected on the sale as a 20% increase on the sale. For UK-to-UK transactions, the buyer will just see a price that includes the VAT.
Buyers should bear in mind that this isn’t the case for sales to and from the UK from the EU. In this case, buyers will be shown a price that does not include the VAT. The VAT will then be added on at checkout separately. This added 20% will be paid directly to Bricklink, so at least sellers will not have to do anything with regards to VAT on those sales.
Bricklink will send a VAT invoice for all these transactions. Sellers should also be aware that the low consignment relief on purchases under £15 has also been rescinded since Brexit. That means all of your sales will be subject to VAT, regardless of their size.
What Sales Are Bricklink Not Responsible For?
For any sales between the UK and EU over the £135 limit the sellers will be responsible for collecting and reporting the VAT. They will also not be responsible for any B2B sales. Previously, sellers would’ve only had to register for VAT if their annual sales reached a certain figure. However, since Brexit, if you wish to continue making sales over £135 you will have to register for VAT in the country of the buyer, unless they are VAT registered themselves.
Conclusion
The new system implemented by Bricklink should certainly make things easier for users. The company has advised non-UK sellers who wish to continue selling into the UK to sign up for Bricklink’s on-site payment method and to use their refund feature. This should streamline the process. Here are some other guidance they have offered sellers.
If you are unsure about any of the points in this article, or anything to do with VAT when selling on a marketplace you should contact a tax expert – this is where we come in.
If you are a business who participates in cross border e-commerce through online market places, we would be more than happy to help you register for UK & EU VAT.
At J&P, helping you build your business is our passion. We understand that companies across the UK are at risk now more than ever. We are here to support you through Brexit and our long history of working with online market place sellers means we can offer you expert advice, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
Sports Direct Under Fire From Tax Investigation
Sports Direct In VAT Dispute With EU Tax Authorities
Following on from our last article that looked at tax investigations, it seemed a good idea to take a look at one of the biggest tax investigations of the year. The investigation in question is the dispute currently taking place between Mike Ashley’s Sports Direct and the EU tax authorities of France, Ireland and Finland. Let’s take a look at what Sports Direct are being accused of, and what the likely outcome of the investigation is.
What Have Sports Direct Done?
Sports Direct set up a separate company called ‘Barlin Delivery’ under the name of Mike Ashley’s brother, John Ashley. It was claimed that this company was set up to deliver orders of Sports Direct abroad, despite the fact that the company actually has no drivers or trucks.
Reportedly, several EU countries are dismayed at the fact that Mike Ashley’s company only paid VAT to the UK over a seven-year period on sales it made to the EU. Mike Ashley’s company have claimed that the purchases made over this period were not a direct transaction between the customer and Sports Direct itself, but rather the customer was paying Barlin Delivery to collect the parcel.
How Has This Allowed Them To Only Pay VAT To The UK?
It is quite clear that when a seller makes a sale abroad, the VAT is owed to the place of the consumer. For example, if someone were to sell a product from the UK to France, the VAT would be owed to France as this is considered the place of purchase.
However, there is another rule that states if a consumer is paying for a product to be ‘picked up’ from another country, then the point of sale would actually take place in the country where the product resides, thus the VAT would be owed to that country. It is being alleged that this is what Sports Direct have been doing. Rather than the customer paying directly to Sports Direct for a product, they have in fact been paying Barlin Delivery to pick it up, meaning that the VAT would theoretically be owed to the UK.
Is Their Case Legitimate?
This is quite a complex case. Reports have claimed that shareholders have already communicated agitation over the company’s allegiance to Barlin Delivery, with reports suggesting that Mike Ashley attempted to pay Barlin approximately £11 million from Sports Direct.
Furthermore, the Financial Reporting Council, the UK tax watchdog who has flagged up Mike Ashley’s company for tax investigation, are concerned as to why Grant Thornton, Sports Direct’s former auditors, did not disclose the relationship between the two companies.
However, Sports Direct did confer with HMRC before making this arrangement and the HMRC apparently had no qualms with the scheme. In fairness, the EU Tax Directive in question, Article 33, was open to interpretation at the time. It is understood that HMRC did advise Sports Direct to check with EU tax authorities before proceeding with the scheme – Sports Direct did not feel this was necessary.
What Is Likely To Be The Outcome Of The Sports Direct Tax Investigation?
The most likely outcome is settlements with the aggrieved countries. It works in Sports Directs favour that the tax laws were slightly ambiguous before this year and they did confer with the HMRC.
However, whilst Sports Direct have claimed that they set the partner company up for ‘administrative simplification’ and not to lessen tax obligations, it is clear that many EU countries will feel as though they are owed some compensation. It is very unlikely that operations set up in this way will be permitted in the future.
Do You Need Help With A Tax Investigation?
At J&P, we have a team devoted to ensuring that you are always VAT compliant. We have strong experience in helping clients through tax investigations and our devoted team can guide you through the process every step of the way.
Please do not hesitate to get in touch should you have any concerns over your VAT returns, or you require assistance with a voluntary tax assessment to ensure everything is on track. You can contact us at compliance@jpaccountant.com, or give us a call on 07734 182821.
Ecommerce Business: Payment Methods
As you probably already know, we at J&P specialize in helping ecommerce sellers expand their business. Whilst we primarily do this through tax services and logistics support, our long history of working alongside ecommerce means we can also offer you advice on other aspects of your business. One such aspect is your payment methods. The way in which you allow your customer to pay can be the difference between making a sale and losing a customer. This article will give you some tips on what your customers expect from your payment methods, which will almost certainly improve your ecommerce business.
If You Are A Cross-Border Ecommerce Business, Know Your Market
A typical mistake ecommerce sellers make is treating consumers from different countries the same. Each country has different tastes and needs when it comes to products. The same applies to payment methods.
For example, in the Netherlands (one of the best ecommerce destinations in Europe) use the payment service provider iDeal to make the majority of their online purchases. Others, such as the UK and Italy prefer PayPal. In some countries, such as Russia, it is quite common for deliveries to be paid for in cash upon arrival.
Ensure before expanding into a country that you have done research into what payment method their consumers like best. This also applies to which device they use, which brings us nicely on to…
Ensure Your Ecommerce Business Is Mobile Friendly
Mobile shopping and payments is a trend that has been growing for some time, but it has been accelerated further since the coronavirus outbreak. Since the lockdowns we are spending more and more time on our phones, and this is already having a knock-on effect for ecommerce.
It is thought that France saw the amount of mobile payments increase by 38% in 2020. The Netherlands saw a similar increase, reports showing that over 70% of the payments made using iDeal were made using a mobile phone.
It is imperative that you make your ecommerce business usable online. The fact that online cart abandonment stands at over 85% on mobile shows that consumers are being put-off by clunky check out processes. When it comes to adopting your business for new technologies, mobile phones are just the tip of the iceberg.
Embrace New Technology
Whilst this can sometimes be daunting, incorporating new technology into your ecommerce business can really set you apart from your competitors. Perhaps the easiest way to do this is by allowing buy-now-pay-later payments. Klarna was the company that made this payment method mainstream, but now Paypal offer a similar service.
If you are feeling more adventurous, experts are speculating that QR code payments are likely to really grow in popularity. It is thought that Paypal has a new merchant adopting the payment method every 38 seconds. This a low-cost contactless payment method to offer your customers.
Cryptocurrency is another really on-trend payment method. To be fair, there is still perhaps a little while yet before this currency becomes mainstream, but with its massive increase in popularity of the last year, it wouldn’t hurt to be early in adapting to incorporate this trend.
Check Your Payment Method Is Compatible With Your Market Place
If you read our article on ecommerce trends for 2021, you’ll remember that we really stressed the importance of adopting a omni-channel business model for ecommerce. One of the best ways to do this is through Online Market Places such as Amazon and eBay.
You have to be careful though when doing so that your payment methods are compatible and allowed by the marketplace. Amazon have their Payment Service Provider Program which only allows you to use approved payment service providers. Similarly, if you are selling on eBay you must ensure that your payment method is acceptable on their managed payments scheme.
Conclusion – If You Are An Ecommerce Seller, Adapt
Hopefully the above tips have gotten you thinking of ways to improve your ecommerce business. The options for payment method is certainly a factor for consumers when it comes to deciding who to purchase a product from, so ensure you make it easy for a customer to buy from you by ensuring your payment methods are up to date.
At J&P, helping ecommerce sellers is our speciality. We can help you expand your business all over the globe, through VAT registration and filing your returns.
Don’t forget, we have the qualifications and knowledge to help you plan ahead, so please do not hesitate to get in touch should you have any further questions about selling on online marketplaces, or if you need any help with adapting your business to comply with the new post-Brexit legislation and the upcoming OSS. You can contact us at enquiries@jpaccountant.com, on our social media, or give us a call on 0161 637 1080.
Tax Investigation: Compliance Checks Are Looming
It is common knowledge that the UK Government have invested unprecedented amounts in order to support businesses and the economy throughout the pandemic. Whilst this spending has been met with justified praise, we haven’t yet been told how they are likely to recoup the money that they have borrowed. Many believed that March’s budget announcement would give us some clue, but the announcement was actually primarily concerned with committing to more spending. One way the government are likely to repay the money they have borrowed is through increased tax investigations. Bearing this in mind, now seems a good time to talk about what a tax investigation is and how to ensure you and your business are tax compliant.
What Is A Tax Investigation?
Fundamentally, a tax investigation is exactly what it sounds like. If the HMRC have reason to believe your accounts may be faulty they may decide to investigate you or your business to ensure you are paying the right amount of tax. The three types of tax investigation are as follows: aspect enquiry, full enquiry, and random check.
Aspect Enquiry
These are the most common form of tax investigations. This type of investigation entails the HMRC reviewing a particular area of your accounts where there are inconsistencies.
Full Enquiry
As with an aspect enquiry, a full enquiry type of investigation is exactly what you might imagine. If the HMRC believes there are significant problems with your payment of tax they may decide to carry out an investigation into all of your business records. This can sometimes include the affairs of the business director.
Random Check
These are rare, but simply occur when the HMRC does a random check of a business. You do not need to have been at fault in any way for a random check to occur. They are, by nature, random.
What Kind Of Errors Could Lead To A Tax Investigation?
Sometimes, a check may be nothing to do with your own accounts. It is not unheard of for the HMRC to investigate a particular sector or industry if they feel there is an usual amount of financial irregularities in the industry.
However, in most cases a tax investigation will be the result of inconsistencies in your tax returns or late and error-ridden submissions.
The HMRC also may have reason to suspect you of tax irregularities if they receive a tip off. The Level of suspicion they have can also result in a longer investigation. Usually, investigations will look at your tax records for the last 4 years, but if they are suspicious enough this can rise to 6 year.
Moreover, you should be aware that these checks are not reserved only for income tax. You can be investigated for almost any kind of tax, such as climate change levy or capital gains tax.
What Do The Investigations Consist Of?
The HMRC can check if you are compliant at any time and you are obliged to cooperate. However, you can appeal their decision if you believe that their justification is unfair, but it will be up to them to decide whether your explanation for whatever irregularity that was found in your accounts is sufficient.
They will inform you if you are facing an investigation, and essentially it will consist of a lot of dialogue between yourself and the HMRC as they audit your accounts. They will ask questions about your operations and accounts, so be sure to get your affairs in order once the procedure has begun.
The investigation can take up to 16 months. The investigation will end with a decision notice and if you are found to have errors in your account there will likely be a contract settlement.
Is An Investigation More Likely At The Moment?
The short answer is yes. As stated in the introduction, the Government’s commitment to recouping the costs of all the coronavirus support packages means that they will likely concentrate on finding tax that they are already owed. It is a known fact that the HMRC miss out on billions of pounds each year in tax issues.
In addition, the recent implementation of Making Tax Digital will make it easier for tax irregularities to be flagged up. Thus, it is more important than ever for you to ensure that your accounts are up to date and submitted on time.
What Our Experts Say:
While almost all high street stores have been suffering heavily due to lockdown measures put in place, eCommerce in Europe and UK enjoyed a massive growth during the pandemic as the forced digitization of retailers and consumers has accelerated the ecommerce. This strong growth has been seen from all major online marketplaces.
For ecommerce traders, Online Selling Compliance Check is the particular tax investigation that HMRC regularly conducts. We can also notice that all tax authorities from major ecommerce markets (EU and UK) have tightened their regulations to detect and diminish tax fraud and to level the playing field in the consumer goods sectors.
HMRC has powers to tackle hidden UK businesses which are trading via online marketplaces. If they can’t make contact with the online seller or those traders remain non-compliant, HMRC will notify the online marketplaces, who will be made jointly and severally liable for future unpaid VAT. In this case, the marketplace has the option to remove the sellers rather than be liable.
HMRC’s report shown that they have issued around 6,000 of these notices between September 2016 and 31st March 2019. Besides, around 65,000 non-EU based sellers applied to register for VAT and have declared around £250 million in additional VAT.
In recent years, HMRC has also expanded their powers to obtain data from third parties. This data will be used to undertake focused compliance activity, and this makes it increasingly difficult for a small minority of businesses to hide their online income deliberately.
Other EU tax authorities have a similar approach to cross border e-commerce business. EU will apply the Ecommerce VAT Package from July 2021, which will make the VAT compliance issues stricter than before.
Conclusion – Tax Investigations Imminent
Tax investigations cases can be extremely irritating and they are naturally complicated due to large amount of data involved, interlinked regulations and multiple procedures to process.
Should you face one, you will have to dedicate significant time and energy to cooperating with the tax authorities. This is why you must double check all your accounts and make sure you avoid simple mistakes that could trigger an investigation.
One way you can do this is by employing the services of a dedicated and experienced accountancy team; that’s where we come in.
At J&P, we have a team devoted to ensuring that you are always VAT compliant. We have strong experience in helping clients through tax investigations and our devoted team can guide you through the process every step of the way.
Please do not hesitate to get in touch should you have any concerns over your VAT returns, or you require assistance with a voluntary tax assessment to ensure everything is on track. You can contact us at compliance@jpaccountant.com, or give us a call on 0161 637 1080.
