It’s 2015, the start of a New Year. Deep down we are hopeful – we’re making resolutions to eat less, drink less, and watch less Jeremy Kyle. And MPs are doing their bit by silently allowing a new VAT law to become enshrined in UK legislation.
It’s the kind of law that will be touted and spun as catching all the naughty big businesses which have avoided paying tax in the UK. It will do this by by taking a sledgehammer to the tax avoidance nut.
In 2015, this tax law is about digital publications. It will knock independently-produced eBooks, ePublications and digital services into the history books. Small to mid-scale companies will end up paying VAT in the country of the consumer and not in the country of production. This means companies will pass on these costs to us.
We’ll be hit first through our mobile phones: voicemail, call-waiting, call-forwarding, caller identification, three-way calling and other call management services including access to the internet will go up in price to balance the costs your provider will now have to write-off in countries with low VAT thresholds like Liechtenstein.
Charities, cancer research and academia will also be hard hit. Small-scale publishers and services will go bust taking many of us with them. But the big boys will remain standing, gobbling up the remains of the independents along the way.
So, how will all work? Well, here’s the kick in the teeth if you run a blog that asks for contributions. It doesn’t matter if your blog earns only 38p a year from sales in Europe, you have provided a digital service for a cost, even a voluntary cost, and that means you will have to be VAT-registered and pay VAT in the country those contributions came from.
VAT is a minefield. You won’t just need an accountant for your 38p; you’ll need a super accountant who is aware of every VAT difference across the EU, the globe and time itself. He will have to be Superman, Dr Who, Alan Sugar, Alan Turing all squashed into one – and he will charge accordingly.
There are ways round this. You could stop selling your eBooks, sewing and knitting patterns, web-hosting, audio downloads, software and training videos outside the UK. That’s right, enforced nationalism. It will be a complete shrinkage of freedom for small businesses on the global market. And not just small businesses. It will shrink the budgets of public bodies involved in research, medicine and academia. It will bugger up gamers, accountants, telecommunications, techies, crafters, readers and anyone committed to the freedoms set up when Tim Berners-Lee gave the World Wide Web to us all for free.
Of course you can still sell your digital goods and music through those massive companies that this law was set up to catch. They’ll pay the VAT without batting an eyelid, but I suspect they will make you register your company in Liechtenstein. How’s that for a New Year’s resolution?
