IPSE, the Association of Independent Professionals and the Self Employed, has today welcomed efforts by David Cameron to bring forward proposals to help self-employed individuals facing the unintended consequences of new EU VAT regulation.
At the European Council summit this week, Downing Street officials have indicated that the Prime Minister will hold direct talks with Jean-Claude Juncker, the Commission President. Cameron will set out proposals to tackle the crippling administrative burden that the changes are placing on microbusinesses.
Jordan Marshall, Policy and External Affairs Adviser at IPSE, said:
“Action from the Prime Minister is very welcome. While it’s no guarantee this problem will be speedily resolved, it shows that government has listened to the concerns that IPSE and other groups have robustly set out.
“These EU changes to VAT policy were well-intentioned but have gone desperately wrong in their implementation. They were intended to tackle the problem of web giants such as Google and Amazon channelling all EU sales through low VAT countries such as Luxembourg, but microbusinesses have become caught in this net.
“Sole traders are simply not able to comply with the onerous administrative burden the regulations impose – it is nonsensical to expect individuals to keep records for ten years. In order to move forward, we need cross-border EU VAT thresholds as well as action to exempt our smallest businesses from the crippling compliance cost”.
“Entrepreneurs play a crucial role in delivering economic prosperity, but these regulations hamper their ability to grow their businesses. Digital services are a huge growth area so it is extremely disappointing to see policy working against those looking to grow their businesses in this sector.
The change in the VAT Place of Supply rules has adversely affected microbusiness in the UK. Widely known as ‘VATMOSS’, the directive changed the location where VAT on digital services sold directly to customers in the EU is charged - from where the digital service is sold to the country where the customer is. This has resulted in microbusinesses selling digital products being saddled with a huge administrative burden that has forced many to stop trading.
