Droves of digital firms waiting on EU VAT rule exemption

Relaxations to the EU’s unpopular VAT rules are anticipated to be announced as early as next month, in what the UK’s e-service suppliers will likely regard as a lifeline.

That’s because although only a relatively small number of firms initially collapsed under the weighty administrative burden of the rules, there are now “tens of thousands” suffering.

Such is the latest estimate from lobby group EUVATACTION, which says the main way affected firms can support the group’s fight against the rules is to go forward to HMRC.

In particular, “take your VATMOSS problems to” the Revenue, because tax officials “now understand the scale and scope of the difficulties which businesses are facing.”

The lobbyist added: “The more evidence HMRC has, the stronger the case they can make [for] asking for a thorough review of this legislation to make it workable.”

The appeal comes as an MEP for the South East of England, Catherine Bearder, says she believes that the European Commission will propose relaxations to the rules in May.

Specifically, she claims that a single minimum threshold across the EU to exempt the smallest digital suppliers from the requirements might be introduced, MailOnline reported.

The MEP’s expectation coincides with a report from Enterprise Nation estimating the number of e-service suppliers impacted by the rules to be in the region of 250,000.

Reflecting on the report, which suggests HMRC prepared for only 5,000 firms being affected, contractor body IPSE said implementation of the rules was “poorly thought through.”

“A shocking lack of joined-up thinking from government appears to be at the root of the problem,” said the Association of Independent Professionals and the Self-Employed (IPSE).

“HMRC's calculations were way wide of the mark, but, even worse, it ignored analysis by [the business department] that has proved far more accurate and could have helped”.

Addressing policy-makers, IPSE’s Jordan Marshall said: “We urgently need to exempt our smallest businesses from the crippling compliance cost of this regulation.”