New VAT rules for UK sellers of digital downloads from January 1st 2015.

Just a heads up for any UK people that the new HMRC rules for all sellers of digital product (music,books,footage etc.) must register for VAT regardless of the normal threshold by January 2015.

https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

Yes that's right people, if you sell one download direct to the public from your website, you must register and submit VAT returns every quarter regardless of how many you sell.

Absurd? You betcha!

Usual disclaimers apply here, but according to this FT article, the UK Treasury say:

Digital VAT changes threaten fledgling UK entrepreneurs

The Treasury said: “The vast majority of microbusinesses are unlikely to be affected by the changes – because they trade through a third party platform or marketplace and where this happens it will be the responsibility of the marketplace operator to account for the VAT.”

http://www.ft.com/cms/s/0/2d77e358-74c4-11e4-a418-00144feabdc0.html


So I am assuming, but no liability here, please check for yourself, that Pond5, Amazon, iTunes etc are responsible for paying UK VAT on our behalf.

This government document seems to confirm this:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/390300/VAT_MOSS_Flow_chart.pdf


I have currently suspended all direct downloads from my own website, but confirmation from Pond5 would be appreciated that they accept responsibility for making sure the correct VAT is paid on our behalf.


I personally don't accept this as it places a huge burden on my business employing a book-keeper to submit quarterly returns. If you agree, then do sign the petition urging the government to rethink this change.

https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products

Yes, Pond5 pays all the taxes. Don't worry here. But, yes. If you sell from your website, then of course you should pay taxes!

wow really? So am I correct in saying that we do not need to let Mr tax collector know about any revenue made on this site because this is all covered by Pond 5?
thanks

Yes, Pond5 should pay all the taxes as far as I know.

incredible :)
thanks Leo

Just to be clear though folks, we are talking about VAT here not normal income tax. Any money you get paid from Pond5 if it takes you over the allowable threshold - above your PAYE income then you have to pay normal income tax on it as a sole trader. Currently set at £10,000. You might not be making that much just on Pond5, but if it along with other forms of extra income tips you over 10,000 then you have to claim it HMRC.

I knew it was too good to be true :)

Oh well, at least we can claim our expenses on pretty much everything:

http://www.microstockgroup.com/general-stock-discussion/uk-contributors-tax-question/

cheers hithut

This ruins my plans for starting to sell my music directly. Oh well, looks like I'll have to always go through a 3rd party and pay fees to them. Government always trying to keep the little guy down.

+1 Erick

the governments do not win by everyone tapping into their creative sides making money for themselves. They want to keep the world industrialised and keep everyone stuck in their 9-5 jobs. It keeps the so called 'elites' in place where they want to be. This system will eventually collapse, hopefully sooner rather than later and they won't even see it coming.

Until that day just keep doing what you do ;-)

You don't necessarily have to take a big hit Erick - take a look at www.payhip.com and www.digitalgoodsstore.com who deal with any VAT declarations on your behalf and only take 5% I believe.

Also remember that this is:

1) For sales to any EU customers (doesn't affect sales to non-EU customers)
2) B2C (business to customer) sales, not B2B (business to business) sales

And yes, this is the most stupid law ever conceived by the EU that will destroy many micro businesses (and they're guilty of quite a few of them lately, cookie law being another).