What’s new in February?
You’ll want to make sure you’re sitting down for this one, as we rush with gay abandon into the heady world of VAT MOSS, capital asset disposals and more.
If keeping up with the exciting developments in the world of VAT is your thing, then you’ll be aware of the furore surrounding changes to the way tax is handled for businesses supplying digital services to consumers in the EU.
Designed to prevent large corporations unfairly exploiting international tax rules, from January 1 2015 VAT on digital services is paid in the consumer’s country, not the supplier’s country, and is charged at the rate that applies in the consumer’s country.
But for a small business selling ebooks online for instance, this would involve potentially registering for sales tax in every EU country you supply to. Which would be painful to say the least.
To simplify things HMRC came to the rescue with the introduction of VAT Mini One Stop Shop (MOSS). Once you’re registered for MOSS, you can account for the VAT due on sales in other EU countries by submitting a single quarterly return and payment to HMRC.
Still with me? OK. HMRC will then send an electronic copy of the appropriate part of your return, and any payment, to each relevant country’s tax authority.
Now, if for any reason that wasn’t as clear as an azure sky of deepest summer, take a look at the HMRC guidance on MOSS.
How FreeAgent helps
If you do think the new rules will apply to you, then FreeAgent is here to help. The first thing to do is head over to the Settings >VAT Registration page and confirm you’ll be making VAT MOSS sales. If you’re already VAT registered, select the EC VAT Reporting option.
When you create an invoice or explain a bank transaction as Sales, you can now flag this as being under VAT MOSS, and include the place of supply. This will let you apply the appropriate sales tax for the country, and ensure the sale doesn’t appear on your normal VAT return (if you have one).
Finally, you can now view a list of all VAT MOSS transactions on the Show Transactions page under a separate category, which should make filing your MOSS return easier.
If that hasn’t completely satiated your desire for VAT MOSS then our Knowledge Base article keeps the fun rolling.
Disposing of capital assets
Now, VAT MOSS is a tough act to follow, but we think now having the ability to dispose of capital assets is up to the task!
Previously you could record the purchases of capital assets but there was no way to explain if you’d sold an asset.
You can now explain transactions as disposals of capital assets, which will prevent further depreciation, ledger the profit or loss made on the disposal, and get all the accounts right.
Our Knowledge Base article explains how this all works, and includes information on what to do if you’ve been previously journalling for capital assets disposals.
- You can now run the aged debtor/creditor reports as at any date of your choosing.
- When you view the invoices tab for individual contacts you now have the filter option to see only Draft invoices.
And I think that’s probably enough excitement for one day.
Until next time,
Roan and the team at FreeAgent
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.