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IPSE backs report criticising HMRCs handling of VATMOSS

The report argues that HMRC drastically miscalculated the number of businesses that would be affected by the changes and did little to raise awareness of the changes in the marketplace until just weeks before implementation. 

Jordan Marshall, policy and external affairs adviser at IPSE, said, “The huge impact the changes have had on microbusinesses dealing in digital content is now clear. Today’s report highlights that the implementation of these EU VAT changes was poorly thought through. The legislation was intended to tackle large multinationals avoiding tax by channelling all EU sales through low VAT countries such as Luxembourg, but Enterprise Nation has estimated that over 250,000 microbusinesses are being hampered by the regulations.

“A shocking lack of joined-up thinking from government appears to be at the root of the problem. The report shows that while HMRC put the number of likely affected firms at 5,000, BIS found the figure to be almost 350,000, but this seems to have been ignored when implementing the measures. HMRC’s calculations were way wide of the mark, but, even worse, it ignored analysis by BIS that has proved far more accurate and could have helped the sector better prepare.

“These businesses are among the most flexible and innovative and at a time when productivity in the UK is stalling, HMRC should be doing all it can to enable these microbusinesses to prosper. Moving forward, we urgently need to exempt our smallest businesses from the crippling compliance cost of this regulation”.


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