EUVAT - Amazon's coping method.

I was going to post my reason for being furious with VATMOSS today, but I saw this in the paper in the supermarket and thought it needed to be said.

In a case study for a client in February I pointed out that there was one very simple reason VAT would hit smaller businesses disproportionately. That was because multi-nationals could afford to set up subsidiaries in each country and route VAT through them, so only need to deal with one VAT rate per office and removing the requirements to store customer details. Small businesses rely on the same website supplying every country, so need to split the sales down by country, record and store customer details etc. which creates a huge admin overhead.

And what is in the Mail today?
Amazon sets up UK subsidiary to handle UK sales
The Mail have given it a nice spin of “they’ re finally paying tax”, without mentioning the laws that would have forced them to pay the VAT anyway. Note, this neatly takes Amazon UK out of VATMOSS.

Now if a company the size of Amazon would rather set up a new subsidiary than handle VATMOSS admin requirements, what chance do small businesses have?

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This blog has now moved to http://www.rablogs.co.uk/tirial, where the original article can be found.  EUVAT - Amazon's coping method. - http://rablogs.co.uk/tirial/2015/05/23/euvat-amazons-coping-method/ was published on May 23, 2015 at 10:50 am.

A few thoughts on EUVAT - a right VAT Mess

So today I am writing about #EUVAT, a daft and damaging law written by a government so disconnected from its electorate that it didn’t remember small businesses exist. I’m not kidding, they’ve admitted it. (“Only 7% of businesses sell overseas” – Actually its 96%, ‘cos they forgot Paypal).

For anyone not familiar – most of the UK, as HMRC hasn’t exactly been telling people – from 1st Jan 2015 if you sell something online – an ebook, an app, an MP3, the seller has to work out and pay VAT to the government of the country where the buyer is located. For ebooks, this is 81-odd VAT rates, for 28 countries. You also have to capture two pieces of ID, which match, to confirm the country and hold them for ten years. Small businesses can’t do this, heck, even Paypal can’t do this…
 
The EU have said they will look at it again in 2016, when they will also make it cove r physical goods. 200 firms have closed so far, others are geoblocking EU customers, and some have had to switch to third parties who take a massive cut of earnings. One author quotes losing 80% of earnings to tax and fees. Many US SMEs will no longer sell to the UK. There’s a full breakdown of the damage here: 2015 EU Digital VAT (PDF)

So rather than detailing what you can do, which has been covered in detail by EUVATACTION, I thought I’d write about easy ways the EU could fix this legislation:

1) Add a Rider
Where the company or artist cannot locate the purchaser VAT on a purchase is paid as if purchased in the country of origin.
– Amazon and companies holding user accounts cannot say they don’t know the purchaser.
– Small businesses using Paypal definitely don’t.
Shipping addresses don’t count for location as the person it is shipped to may not be the purchaser. If a large company deliberately stops holding user data to avoid this, that’s tax avoidance and can be fined.

2) Add a Threshold
Microbusinesses by the EU classification pay VAT as if all sales are in country of origin
– Easily catches Amazon, Google and the large players
– As the minimum turnover is 2M euros, any firm of this size has the resources to implement a fix (est. cost £5,000/7,500 euros)
This is euva taction’s prefered option.

3) Refund Collection Costs
Allow companies to recover the cost of collecting VAT from the tax departments in question
e.g. if a person owes 1.67 euros to Spain and it costs them £180 to work out, £50 in lost business for calculation time*, and £40 in international transfers, The Spanish government owes them £270 – 1.67 euros. Cost of collection to be remitted first, so that the transfer fees can be paid.
Alternatively let it accrue, and when the debt owed reachs £500 (yes, the joy of working out currency conversion also falls on the tax dept) the government pays out. Turns EUVAT into a tax on large businesses and a subsidy for smaller ones worldwide.

* Set a base rate of minimum wage for collection time, and then allow the business to use its chargeable hourly rate if that is higher.

4) Centralise Accountability
Turn VATMOSS into a pool companies pay into at a flat rate, which then distributes payment Europe-wide.
Each VATMOSS receives payment at a flat average VAT rate (say 20%). It is then up to the VATMOSS group to work out percentages of how much was purchased from each EU country and remit a percentage of the pool to each.

Note: They don’t get to ask for purchase data, or go back to companies who have paid the flat rate and ask for more. After all, companies can’t go back to consumers to ask for more, and giving out client data like that breaches PCI DSS. The company’s obligation to digital tax ends with paying the Europe-wide MOSS rate. From there on, liuability rests with the MOSS teams, and they are the ones taken to court if it goes wrong. After all, these are people trained and paid specifcally to deal with tax. (They can use web traffic levels, etc.)

Alright, option 3 and 4 could be termed making EU VAT a nightmare for the tax departments. I view it more as shi fting the burden back where it belongs, onto the people who created the problem in the first place and civil servants who are paid specifically to deal with tax. Small businesses don’t have tax specialists or finance departments, so why does this law assume they do?

On a closing note, there are things you can do:
Lobby your MP and MEP for a country-wide exemption until the legislation is fixed. In the US, lobby your senator: no taxation without representation.
Approach industry and consumer bodies to see if they will take action
Tweet, twitter and get the word out. #EUVAT and #VATMESS are in use. I’ve put some banners on this page if you want to add one to your site.

Finally visit EuVatAction or join their facebook page for updates

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This blog has now moved to http://www.rablogs.co.uk/tirial, where the original article can be found.  A few thoughts on EUVAT - a right VAT Mess - http://rablogs.co.uk/tirial/2015/05/21/a-few-thoughts-on-euvat-a-right-vat-mess/ was published on May 21, 2015 at 7:52 am.

London Riots (Again? Really?)

So, just at the start of Thatcher’s government there are riots at the start of Cameron’s. It is disappointing – no matter whether you like the election result or not (I don’t) the right-wingers sucked it up under Blair for 13 years without this kind of rubbish.  The left-wing need to do the same.  

Can’t help thinking that this:
Charlotte Church plans makeover of £1M home

is linked to this:
Charlotte Church “Mad as hell” as she joins Cardiff protest following Conservative majority

Or perhaps not. After all it’s not as if z-list, sorry former b-list celebrities ever mouth off about politics when they ne ed a higher profile or have something to sell…

I’m sure I can’t think of any recent comedian examples.

(And insulting my grandmothers and your own – “Tory Scum”? Some of those WWII women helped found the NHS for heaven’s sake!  – does nothing to make your point of view dearer.)

And as for this claim that Labour would be better? Ha!

I watched Blair and Brown slam part-time teachers and agency nurses when trying to hit IT contractors who simply went overseas (IR35). I watched them destroy the entire industry I worked in and sell my UK client relationships to big business (not to mention resurrecting a law that specifically targets female business owners by assuming their income is their husband’s – S660). Cameron& #8217;s now allowing a new law that will destroy the rest of my rebuilt business – #EUVAT, due to be rolled out to all online sales next year – which has just removed the entire US customer base I’d built to replace the UK one. I’m burned out. I just don’t care anymore.

There is absolutely no point in trying to build a small business in this country. After 13 years of Labour and 5 years of the Con/Dems I’m damned if I can tell the difference.

Bitter? Oh hell yeah. But I’m not destroying people’s workplaces and homes, or insulting dead women.

I’m just not sure I can pick myself up and try to rebuild a company for the third time in fifteen years either.

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This blog has now moved to http://www.rablogs.co.uk/tirial, where the original article can be found.  London Riots (Again? Really?) - http://rablogs.co.uk/tirial/2015/05/09/london-riots-again-really/ was published on May 9, 2015 at 8:04 pm.

Voting and Elections

I was going to post about EUVAT and the mess that’s about to cost 750,000 British jobs due to a leftover of Brown’s government that Cameron’s done little about, or possibly a vaguely comical post on the local election campaign. Then I saw this video by Helen Pankhurst.

http://t.co/htpeluSBO8

This annoys me. This bloody well annoys me.

1. The suffragettes and suffragists fought for the right for women to vote, not to make voting compulsory, just as women in the 70’s fought for the right to choose a career, not to make work compulsory.
2. My gender does not give you the right to demand what I do, even if you are another woman.
3. This argument could as well be made for every group that now has the vote:
   1. Every man who owns property worth £10 or more should thank Lord Grey and the Whig government of 1832 for going against Arthur Wellesley Duke of Wellington to secure middle class sufferage.
   2. Male lodgers should thank the Chartist Movement and the reform act of 1868. The Chartists were arrested, opposed (the word "crushed" was used) by the authorities, and spent 30 years fighting for the right to vote.
   3. All other men should be grateful for the 1880’s acts.

It is worth remembering that the right to vote was fought for not just by women, but by the ancestors of every voter in the country at some point or another. Electoral reform was not a peaceful process, with riots, uprisings and more in a process that went from wealthy landowners only in the 1820's to universal sufferage in the 1920s. The suffragettes were force-fed in the 1900's. The Chartists, fifty years earlier, were tried for treason and transported.

The right to vote was won by the people and then protected by those who fought the second world war, those who stood on the front lines through the cold war and those be hind them who guarded that right from attacks at home.

Thanks to them, the long chain of campaign and sacrifice, you have the right to vote in Britain. You also have the right to choose not to, which is just as important.

I intend to vote. You don't have to.

My reasoning basically goes that it’s the only time for four years you get to have a direct say in government, so vote if you can find someone to support. If you want to protest, spoil your ballet paper, vote for a minority candidate, or tear up the sheet, but consider at least taking the time to stand in the ballot box. Because if you aren’t there, the people in charge just think you’re happy with the status quo.

But whether you decide to vote tomorrow, or whether you decide not to, make sure it is something you decide. Because if you don’t speak up for your future, someone else will.

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This blog has now moved to http://www.rablogs.co.uk/tirial, where the original article can be found.  Voting and Elections - http://rablogs.co.uk/tirial/2015/05/06/voting-and-elections/ was published on May 6, 2015 at 8:16 am.