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A Trillion Euro’s lost to tax evasion in the EU


A Trillion is a huge amount, its almost too large to imagine.

Here is the latest campaign video

As part of the intensified battle against tax fraud, the Commission launched on 6th February 2014 the process to start negotiations with Russia and Norway on administrative cooperation agreements in the area of Value Added Tax (VAT). The broad goal of these agreements would be to establish a framework of mutual assistance in combatting cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors. Given the growth of these sectors, more effective tools to fight such fraud are essential to protect public budgets. Cooperation agreements with the EU’s neighbours and trading partners would improve Member States’ chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. The Commission is therefore asking Member States for a mandate to start such negotiations with Russia and Norway, while continuing exploratory talks with a number of other important international partners.

VAT Returns may soon be monthly…

3D Vat button block cube text

From January 2017 the European Commission would like to make VAT returns monthly in all member states. Currently most UK businesses file quarterly, they only file monthly if they get regular refunds.

The European Commission see this as cutting red tape, but I am not sure how going from 4 returns to 12 returns cuts red tape?

The Commission say they have received complaints from companies who do business across Europe about confusion over the frequency of returns.

The EC is hoping to introduce a single format return, with just five mandatory boxes.  This will include:

  1. input VAT;
  2. output VAT;
  3. net VAT payable;
  4. value of input transactions; and
  5. value of output transactions.

and there could be a concession for small businesses allowing them to continue to do quarterly returns.

Do you think monthly returns would be better or worse for UK Business?

The Parent Subsidiary Directive

MCS Corp Logo

by Greville Warwick

The EU puts out its Directives and not much notice is taken until an issue drives it out for debate and scrutiny. This Directive was intended to prevent same-group enitities based in different states from being taxed twice or even thrice, yet it has been turned on its head and ignited furious debates and streams of hysterical wailing and gnashing of teeth by politicians who signed us up to the Directive, nodded all its gold-plated UK provisons through and now find it is not doing what they thought it would do.

Trade Union chieftains routinely accuse global companies of dodging taxes by trading across legal jurisdictions in exact accordance with the provisions and various national statutes based on the Parent-Subsidiary Directive. These same blockheads didn’t utter a single word of caution or advice when their political comrades devised, gold-plated, kept secret and craftily nodded through the mother of all Parliaments in the good old days when Antony Blair of that ilk ruled in conjunction with the Marxist Scotsman economist-of-note Gordon Brown, also of that ilk.

Just why the Unions should hold the present Government responsible for cross jurisdictional tax avoidance, when it is in accordance with statutes which they helped put in place, is not clear. Perhaps big Bob Crow or wee Len MaCluskie could explain their turncoat tactics in time for the Euro elections in May. If there are people in politics, the Church and high places who resent the big corporations and how they pay tax, they should have the guts and honesty to own up to their own stupidity and complicity in accepting the Directives that underpin it to this day!

Directives are issued in various formats. It is usually instructive to consult the versions issued in French and which are adopted for French domestic use. These are more likely to indicate the original true and fair intention and actual content of the Directives. It is well established that the British versions of Directives often end up almost totally different to those that are adopted by the French in their simplified format as proper working statutes and discussion documents designed to help and facilitate compliance and effect rather than to baffle, confuse and destablilise the issues they are intended to clarify and improve.

Lawyers do well out of the British Directives, Regulations and Interpretations that dog so many of our industries, commercial undertakings and ordinary people who get caught up in their toils and misrepresentations. It is time to take stock.

EU VAT B2C – e services to be vatable where they are consumed


At the moment all businesses supplying telecommunications, broadcasting and e-services such as downloaded ‘apps’, music, gaming, e-books and similar services to private consumers located in other EU Member States (referred to as ‘B2C’ supplies) are taxed where the business supplier is established, which is simple to understand and implement.

In the Finance Bill 2014 this will be changed and from 1st January 2015 VAT will be charged in the country where the customer has ‘use and enjoyment’ of the services.

So lets say you are an American (normally zero rated) on holiday in France, even though you pay with an American credit card and buy from a UK supplier because you are reading your ebook in France, French VAT will apply. Sounds like a nightmare, doesn’t it.

To help with this HMRC are introducing the VAT MOSS (Mini One Stop Shop) and businesses can register from October 2014.

Unless businesses opt to register for MOSS, businesses that make intra EU B2C supplies of telecommunications, broadcasting and e-services will be required to register and account for VAT in every Member State in which they have customers. MOSS will give these businesses the option of registering in just the UK and accounting for VAT on supplies to their customers in other Member States using a single online MOSS VAT return submitted to HMRC. This will significantly reduce their administrative burdens.

  • Examples of telecommunications services include: fixed and mobile telephone services; videophone services; paging services; facsimile, telegraph and telex services; access to the internet and worldwide web.
  • Examples of broadcasting services include: radio and television programmes transmitted over a radio or television network, and live broadcasts over the internet.
  • Examples of e-services include: video on demand, downloaded applications (or “apps”), music downloads, gaming, e-books, anti-virus software and online auctions.

HMRC VAT Place of Supply Link

If you supply e services its worth considering the accounting and pricing changes that you will need to implement and how you will incorporate the ‘use and enjoyment’ rules.

VAT Return Box 2 EU Aquisitions? This is what you need to enter

3D Vat button block cube text

Personally I have always found this box a little odd as its not taken from invoices its calculated by you.

Box 2 Acquisition Tax is calculated as UK VAT due on VAT free purchase of goods from other Member States, i.e. 20% x Box 9 figure, the same amount is then entered in Box 4 (as noted below by HMRC) so the net effect is Zero.

Box 9 Total EU Purchases are the value of goods bought from other EU Member States on a VAT free basis.

The following are HMRC’s instructions:

Box 2: VAT due from you (but not paid) on acquisitions from other EU countries

You need to work out the VAT due – but not yet paid by you – on goods that you buy from other EU countries, and any services directly related to those goods (such as delivery charges). Put the figure in Box 2. You may be able to reclaim this amount, and if so remember to include this figure in your total in Box 4.

Box 4: VAT reclaimable on your purchases

This is the VAT you have been charged on your purchases for use in your business. You should also include:

  • VAT due (but not paid) on goods from other EU countries and services directly related to those goods (such as delivery charges) – this is the figure you put in Box 2

If you trade regularly with the EU you may be required to do Intrastat Returns, here is a chart that explains the basics

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