EU Tax Rule Change – Serious Challenge for Business?

EU Tax Rule Change - Serious Challenge for Business?

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EU Tax Rule Change - Serious Challenge for Business? HMRC will publicise its interpretation of the new changes to EU Services VAT rules tomorrow. The announcement, which coincides with the Budget, could create a serious challenge for UK businesses.

The legislative changes will mean businesses providing or purchasing services from the EU will be required to adopt a tax point based on either the time of supply of services, or the time of payment, whichever is earlier – the convention of using the invoice date will no longer apply.

Kevin Misselbrook, customer services director for Access Accounting, commented,

“With these new rules, businesses will have to track the dates of delivery that the services were provided, and account for VAT accordingly. Things get really complicated with invoices that cover multiple deliveries of services, or those occasions where the service dates change. Additionally there is a whole raft of rules and exceptions covering, for example, contract services, transport, entertaining services and education. This could lead to all kinds of confusion with so many different tax treatments being applied depending upon the trading scenario.

“This will place an even greater burden on business at a time when what they really need is help and support as they steer their way through the current recession. Indeed many organisations may not currently be aware that the new VAT rules will be coming into force, which is why we’re keen to see that this issue is not buried within the Budget.

The new tax point rules will come into effect on 1st January 2010.

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