From 20 October businesses supplying digital services across the EU can register for the new VAT Mini One Stop Shop (MOSS), said HM Revenue & Customs (HMRC).
The service is designed to save suppliers from having to register for VAT in every EU state where they do business. It is expected that up to 42,000 businesses will register for the service.
Chris Chown of AccountingWEB.co.uk warned: ‘This will be expensive and impractical for small businesses. An alternative would be for small businesses to register voluntarily for VAT in the UK and take advantage of the new MOSS, but this would give rise to a VAT charge on all their supplies in the UK’.
Chairman of the Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty, Rebecca Benneyworth, said: ‘Small businesses in the UK who are not registered for VAT have a difficult decision to make’.
The new MOSS will be useable from 1 January 2015 for businesses that have registered.