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How the VAT Mini One Stop Shop scheme will work in a no-deal Brexit scenario.

The guidance issued by the government to businesses and consumers on how to prepare if the UK leaves the EU with no deal covers a number of areas, including VAT Mini One Stop Shop (MOSS).

Brexit and VAT MOSS

If the UK leaves the EU without an agreement, the UK will stop being part of EU-wide VAT IT systems such as VAT MOSS.

Businesses that want to continue to use the MOSS system will need to register for a MOSS non-union scheme in an EU member state. The non-union MOSS scheme requires businesses to register by the 10th day of the month following a sale. So if a business makes a sale from 29 to 31 March 2019, it will need to register by 10 April 2019; and if it makes a sale in April 2019, it will need to register by 10 May 2019. Until then, business is as usual for VAT-registered UK businesses that supply digital services to EU countries.

ACCA has produced a summary of VAT in the event of Brexit with no deal in March 2019.

 What is VAT MOSS?

UK businesses pay VAT via the VAT MOSS scheme if they supply certain digital services to other EU countries. To pay the VAT due on sales, they can either:

  • register for VAT in each EU country where digital services are supplied to consumers
  • use the VAT MOSS scheme in one EU country.

Currently the main features of the VAT MOSS scheme are:

  • It does not affect business-to-business sales.
  • VAT payable is based on the country where the customer is based rather than where the seller is based.
  • There is no registration threshold.
  • VAT is charged at the rate due in the consumer’s country.
  • UK businesses do not have to register in the other 27 member states.
  • Only one single VAT MOSS return needs to be filed each calendar quarter.
  • HMRC sends the relevant parts of the return and payment to the tax authority of the country where the ultimate customers are based.
  • UK businesses use union VAT MOSS scheme for supplying digital services to EU countries.

Currently there are two types of scheme:

  • union VAT MOSS, for businesses based in the EU, including the UK
  • non-union VAT MOSS, for businesses based outside the EU.

Union VAT MOSS

To use the union VAT MOSS scheme in the UK, your business must:

  • be based in the UK, or be a non-EU business with a fixed establishment in the UK
  • be registered for UK VAT
  • supply digital services to customers in the EU

If your business turnover is below the UK VAT threshold you still need to register for UK VAT to use the union VAT MOSS scheme.

 Non-union VAT MOSS

To use the non-union VAT MOSS scheme in the UK, your business must:

  • be based outside the EU
  • have no fixed or business establishments in the EU
  • supply digital services to customers in the EU.

The non-union VAT MOSS scheme will apply after 29 March 2019 if no deal has been struck by then.

Read this full guidance for VAT and this collection of guidance on how to prepare for Brexit if there is no deal.

Article from ACCA In Practice