From author Juliet E. McKenna:
Ah, the law of unintended consequences. You really would have thought legislators would know about that one. Apparently not. New VAT legislation to stop the likes of Amazon sneaking round their tax liabilities has a massive flaw. The turnover threshold is set at £0 which means small online retailers of ebooks and other digital products will have to compile VAT returns including details of the countries where each and every customer is based.
There’s more information at Cheryl Morgan’s website since unsurprisingly, this will make life for Wizard’s Tower Press untenable. Which will make earning any sort of income significantly harder for me and all of her other authors.
Just to give you some idea of how bad this is, Cheryl says –
The implications for any small company selling digital products are so horrendous that the Head of Tax at the Institute of Chartered Accountants (England & Wales) has apparently suggested that small businesses stop selling in Europe to avoid all of this mess. Except, how can you? The digital world is global by nature. The better-written platforms, such as Amazon, will at least allow you to block sales via their EU-based sites. However, there’s nothing to stop someone in, say, Finland, buying one of my books via Amazon US, or Amazon UK. If they did, I may be legally obliged to account for that, and Amazon’s systems don’t give me enough information to do that.
. . . .
No one, not even HMRC, has any idea how this will apply to crowdfunding such as Kickstarter.
Apparently HMRC talked to a ‘small business consultative group’ about all this to satisfy consultation requirements. No one seems to have any details about who was part of that group though.
This notion of sufficient consultation completely misses the point that most small and especially online businesses won’t actually belong to any professional or other organisations who might be expected to represent the reality of their trading models.
And as Cheryl Morgan has pointed out, the HMRC definition of ‘small business’ means an enterprise capable of providing a living for one or more people. This excludes vast numbers of ‘micro-businesses’ which are run from home, predominately online, as sidelines or to fund hobbies. For instance, a lot of people selling their knitting and embroidery patterns reckon they will be shut down by this.
Link to the rest at Juliet E. McKenna
Here’s a link to Juliet E. McKenna’s books
PG says these are the same kinds of problems that would tie up similar businesses in the US if laws are passed permitting the collection of sales taxes from out-of-state sellers.