New guidance on EU VAT changes published by HMRC

HMRC publishes new guidance on EU VAT changes

The changes to VAT rules for cross-border sales in the EU that are coming into force on 1st January have been the source of a lot of recent debate, with widespread concerns over the effect they will have on small businesses making digital sales.

HM Revenue and Customs have today published new guidance online on the rules, which will be worth reading for any games companies concerned about how to adapt to the changes.

Jas Purewal, of Ukie legal members Purewal and Partners, recently provided a practical guide to the changes for us, which games companies will hopefully also find useful. And Dermot Stapleton, Operations Director at the digital publisher Mastertronic Group, gave us some personal thoughts on how their different businesses have had to adapt.

One key passage in the new HMRC guidance is the section on 'Digital portals, platforms, gateways and marketplaces'. The majority of games businesses will be providing (or able to provide) their games through a service that meets the description given by HMRC, meaning they will not have to account for VAT on their cross-border sales, and will not have to make changes to their internal procedures:

"If you supply e-services to consumers through an internet portal, gateway or marketplace, you need to determine whether you are making the supply to the consumer or to the platform operator. If the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer."