On January 1, 2015, the Vat rules changed. Whereas in the past, if you made a sale over the internet to a person in Germany, the Vat was charged at the UK rate. After that date, Vat is charged at the German rate (and the same for the other EC countries). Fortunately, I found out about this, quite by accident, on 30 December 2014, and I was able to change my billing software to deal with it. I don't know how many other businesses didn't find out about it.
My last Vat period was Dec 2014 to Feb 2015, and we did our Vat return as per normal then. At the end of March was the first quarter under the new rules. I registered on the HMRC Vat Moss site, and got stuck in.
For each of 27 countries (that's the EC 28, without UK) I had to fill in my sales over that period, look up the Vat rate for that country and fill that in. That gave me a total figure of Vat owed over the period. But this can't be right, I thought, I've already paid Vat for Jan and Feb under the old method - this would be double paying. So I phoned up the help line, 0300 200 3700. I listened to 20 minutes of music, then spoke to a human.
I was right. Double paying. So how to sort this out? I needed to download form VAT 652, and fill it in.
First, I had to work out how much had been double-paid. That would be the Vat paid for the 27 countries (EC minus UK), for January and February. I worked that out with my spreadsheet, and then I could fill in Form 652. But what do I do with that form? The web site gave me no clue, so I phoned up again, listened to 20 minutes more music, and spoke to a guy who told me the address to post it to. He also told me how to claim back the overpayment - I do it by adding to the "line 4" number on the usual Vat form. So, hopefully, that's sorted now.
In future, I'll only declare the Vat for UK sales on the usual Vat form, four times per year. And sales to the other EC countries will be done via the Vat MOSS form, also four times per year, but whereas the usual Vat is done on months Dec-Feb, Mar-May, Jun-Aug and Sep-Nov, the Vat MOSS is done Jan-Mar, Apr-Jun, Jul-Sep and Oct-Dec. Annoying.
The impression I have is that HMRC are getting deluged with calls for help on dealing with Vat MOSS, but I suppose they'd have the same problem whenever the tax system changes. And that's some comfort to me, because although I don't exactly welcome paying tax, I really hate it when they change the system, especially when they don't tell me about it and I find out a couple of days before the system changes.
I wonder how many small businesses are struggling with this new system?