Whitehall at war: Govt’s webocrats trash vital digital VAT site Open warfare has broken out in Whitehall after the Government’s own much-hyped in-house IT team, GDS, publicly trashed a new VAT service vital to small digital businesses. The Register understands the service works well - but didn’t use GDS and was failed for meeting its taste guidelines. This week the Government Digital …
I know nothing about this EU VAT malarkey but the existing VAT site is now a right PITA to use. Links you used to click on to get into the working parts now take you to some wanky.gov.uk vanity site which you immediately backtrack from because it doesn't do anything and you have to really dig about on the original site to get to the login page. What used to be a smart way to do your VAT return has degenerated into a "WTF did I do last time to get into this" mess.
Lots of folks know nothing about this EU VAT malarky and it's going to bite lots of people in the bum rather hard.
In spite of HMRC and the government claiming that they have extensively publicised the forthcoming changes, I only became aware of them a couple of weeks ago and we're going to be pulling all digital products from our website by the end of December until we can work out how to deal with the VAT MOSS VAT mess. (Fortunately for us, we mainly sell physical products and they aren't affected, but we do have several dozen digital download products too and were planning to do more in the future so we're going to have to sort this out sometime in the new year.)
If you don't deliver digital content to consumers in the EU in any form, then by all means don't worry about it - it'll save you some headaches and several "WTF were they thinking?" moments. If you do deliver digital content (video, audio, ebooks, software downloads, etc.) to consumers in the EU, do some digging and find out what it's all about. PITA doesn't even begin to describe it. Not that any of it is particularly challenging in concept, but like all government and EU interventions, the practicalities and making it workable are another matter altogether...
Having said that - and being fair to the folks at HMRC - the VAT MOSS idea that they have come up with is, at least, an attempt to make this thing a little easier. I haven't looked at the VAT MOSS site myself yet, but I know that the alternative is just unspeakable so anything that tries to make the process even a little more straightforward gets a thumbs up from me. And if the goons in the GDS are trying to hamstring it, then they should just be told to sod off and actually try doing some useful work themselves rather than just interfering when other people are actually trying to solve real problems.
(Big boom icon, 'cos that's what I'd like to do to the numpties in the EU who came up with this gem.)
"Lots of folks know nothing about this EU VAT malarky and it's going to bite lots of people in the bum rather hard."
Indeed. Not least because...
"In spite of HMRC and the government claiming that they have extensively publicised the forthcoming changes, I only became aware of them a couple of weeks ago"
Over the past few months I've brought it to the attention of people I know (both clients and friends) who will be affected and therefore need to know - not a single one of them was already aware. That's not a particularly good indication of HMRC/Gov having extensive publicised it.
(To make matters worse, a couple of them have pretty much displayed a head in the sand attitude now that they do know - but that's another matter!)
The changes that begin on Jan 1st hit sites that sell digital products with specific requirements (that are really not that difficult). But the idea that because "we mainly sell physical products and they aren't affected" is just plain wrong.
ALL EU businesses are affected from Jan 1st whether they sell digital products or real physical things that need to be transported. At the moment most businesses charge VAT on sales to any one in the EU at the rate set by the respective national government. For a UK business selling cars to Germany then any sale will attract 20% VAT. From Jan 1st ALL businesses will charge VAT at the rate prevailing in country where the goods will be used. In the example above, the VAT on each car sale will be 19% - the rate in Germany.
Of course if the buyer is able to show they are a business by providing a VAT number then in January, as now, VAT does not have to be charged. And this is not new. Any business that is already registered in other EU states must already charges VAT at the rate in the country in which the goods are to be used. So a way of looking at it is that from Jan 1st all businesses are really registered in all EU countries so must charge VAT at the local rate.
There are some new things specifically affecting the sale of digital products. When you sell a physical product you have a good idea of where it will be used and, so, the VAT rate to use. But with digital products the buyer may or may not be in the country identified by the billing address.
So from Jan 1st it is necessary to collect 2 pieces of non-contradictory evidence to determine the location of the buyer and so the rate of VAT to apply. The country of the billing address is on piece of evidence. The country of the IP address is another. In the event that the two do not agree then other pieces of evidence can be used, such as the country of the buyers SIM card if it is available. One piece of evidence is to ask the user to confirm the billing address. This is called self-certification.
Also, if the buyer is in the EU (determined by the IP address of the browser) but the billing address is outside the EU then VAT is to be charged at the rate prevailing in the country of the IP address. This prevents someone declaring they live outside the EU to avoid VAT but then download their digital goody within the EU.
This is not difficult stuff. I've created a solution for some vendors here http://www.lyquidity.com/wpstore/ and there's more information about the change on this site. But there is all you need to know on the HMRC web site and the web site of the EU commission.
Also, if the buyer is in the EU (determined by the IP address of the browser) but the billing address is outside the EU then VAT is to be charged at the rate prevailing in the country of the IP address. This prevents someone declaring they live outside the EU to avoid VAT but then download their digital goody within the EU.
and what about people outside the EU who find download of digital content is blocked to their local IP addr? It's pretty trivial to 'use an IP addr in a different geographical location' but this now means paying VAT for something to be used outside of the EU!
Anyone know the VAT rate in the USA/ Jersey/ IoM/ Andorra/ ...?
As someone working in an org that's done quite a bit of work with HMRC over the years, the idea that GDS is what's causing them to screw things up is pretty laughable. They've been doing a fine job of that all by themselves for years, and years, and years.
Glad its not just me, used it the other day and found myself wondering whether someone had fucked up or if Id just repressed previous memories of having to do that.
Based on their track record, if GDS do ever get a hand in, we'll all be looking at fines when they accidentally make it impossible to file on time
Don't know about you, but if this kid's CV passed in front of me and I saw GDS in the previous employers bit I'd be dropping it straight into the shredder. He might want to rethink going back to college if he wants a job in the future
Great attitude to recruitment - lets take someone who went straight to employment on a major national government project and bin 'em, because it's civil service, innit?
Time I spent in DirectGov when it was expanding (and from contacts in GDS who migrated there from DirectGov) tells me they don't waste time on chaff and seat warmers like 80% of the rest of the civil service - you either work hard, or you get the fuck out.
Steven R
I have an issue with this whole BIG Business approach to IT, on the face of it they seems to make some good decisions i.e. agile. But the problem is over time they spend more time/money on marketing how great they are, taking longer and longer to make decisions and develop their products with their products become blander and safer. A good example of this was B.T. in the 50's to 80's when it was a monopoly you had one big heavy phone in one of two colours, where in the US from the late 60's you could get many different phones including push buttons and they had almost completed the digitising of their phone network. BT also developed a new exchange called system X that was 25 years late, over engineered - the world had already moved on.
They really do need to break up the teams, have some competition, work closer with Universities, try and have a scheme where 75% of new staff are apprentices. IT is a moving target insure that at least every 3 years the IT staff are skilled up on the current technologies that have been mandated. Have a programme to insure all IT's system are brought up to the latest spec's at least every 3 years. And as they use public money, give the source code back to those people that paid for it the UK citizens.
Have a programme to insure all IT's system are brought up to the latest spec's at least every 3 years.
While I think you make a lot of valid points, have you considered what this suggestion would cost? I guess if you were doing this all the time, you'd become expert at building test environments and implementing regression tests etc, but even then it would still be a massive cost.
...like Cabinet Office has tried to re-invent the impressive internal government computer consultancy that they once had - the Central Computer and Telecommunications Agency.
CCTA was a small division of world-class computer experts retained by HM Treasury and later the CO, to provide support for departments and develop methodologies. They created PRINCE and ITIL, amongst other things. They were also instrumental in the development of BS7799, which became the ISO 27000 series of security standards. In those days government computing worked.
They were closed down as a result of lobbying from outside industry, who wanted to take over government computer service provision, during the Thatcher/Major era. A great loss....
I was once involved in a computer-buying exercise for a very technical government department, before the scientific civil service was all privatised. The department head told us they had managed to keep out the useless bureaucrats of CCTA, but had to satisfy the money men in a certain government contracts office.
So I am surprised at the praise for CCTA from Geezer.
...So I am surprised at the praise for CCTA from Geezer....
The detailed history of CCTA is a little more complex than can be presented in at three-sentence comment. There was opposition to it from a number of sources.
Remember that machine computing was effectively invented by the British Scientific Civil Service - mechanically with Naval gun-laying and electronically with cryptanalysis work. This meant that early computing skills lay with the government organisations which had 'boffins' (using the archaic term!) - typically the military and associated services. Systems developed by these staff were typically one-off specialist installations which could not be replicated, and which cost huge amounts...
CCTA could see the commercial future of computing, the huge expansion it would undergo, and the need for structured organisation, maintainability and de-mystification of this novel skill. That was why it developed structured methods such as SSADM and CRAMM, and why it tried to drive the use of open standards in government, formal computing qualifications and bulk purchasing.
This was opposed, not only by industry, but also by the few pre-existing departments with skilled staff, who saw CCTA standards and methods as threatening their unique position of being able to spend large sums on specialist equipment under their own control without worrying about interoperability or standardisation. Look at the disaster that was the Foreign Office 'FOLIOS' project for an example of how some departments tried to avoid CCTA, and the problems that resulted....
The above is necessarily a simplistic comment, of course, and CCTA did not get everything right all the time. But it could see where computing was going, and tried to put the UK government in the best position to take advantage of it. The tragedy was that this was not understood by its 'customers'...
Go GDS! More self-serving drivel.
They've forgotten their own mantra "What is the user need?" In the end user sense, the thing that matters is does it work. Not whether it is open source or tested with four users. Just does it work. Nothing else. Why not start by testing that? And in the HMRC as a user sense, how about being helpful instead of ideological? That would probably be a lot more useful. Statements like 'use a user researcher' is just fluff.
But hey, I suppose it's better than telling me how to say gov.uk.
My wife sells knitting patterns on line and there has been a lot of fuss about digital downloads on various sites. At least one other seller has decided to cease trading. Visiting the web site for MOSS doesn't help much and people have reported that their accountants have told them that as some EU countries have a turnover threshold for VAT registration of ZERO they will need to register even if they are turning over worldwide less than 10,000 GBP a year.
Fortunately I found http://www.vatlive.com/eu-vat-rules/distance-selling-eu-vat-thresholds/ which explains that all counties have adopted a distance selling threshold of about e35,000p.a.
My wife ditto -- plans to sell kniting patterns in Europe as well as around the world and thinking this will be a serious headache. A small yarn business is offering a "we'll handle your VAT payments for a fee" service and will probably clean up.
I note that the report dismissed as 'sniffy' in this article mentions that the site was tested on four people. That rings a tiny alarm-bell for me.
The distance selling rules relate to goods, not services. Digital downloads are services, so the thresholds for distance selling is irrelevant.
As your link says "there are no distance selling thresholds for electronic services to consumers under the new 2015 MOSS VAT rules".
"As your link says "there are no distance selling thresholds for electronic services to consumers under the new 2015 MOSS VAT rules".
I phoned the VAT office and they said that the MOSS rules only applied if you were VAT registered and that if your total turnover was under the 81K threshold you didn't need to register.
The chap I spoke did admit that the information on the website was confusing and that it is going to be clarified.
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The GDS has interfered in the MOSS program because during development the HMRC didnt bother, or even think to talk to the people who were going to use it (4 cannot be described as adequate), and people complain about this? its a rare product or item created which does not need to be improved once the customer is allowed to see it.
I have used too many crap government systems created without input from end users (and especially the end users who struggle at IT) to ever want to touch another one again. Whatever your opinion of GDS if they have stopped another government system which requires you to be an IT guru to understand it (no matter how much functionality is hidden in it) this has to be a good thing!
You need a first class idiot! You know make something idiot proof and along comes an idiot that proves you wrong.
My sister a hematologist wrote some protocols re using a new ( then ) all singing all dancing machine in blood labs. They had the time so managed to get some idiot ( low skilled person ) to try it. They failed! After a discussion with the failing user the protocols were rewritten. They then became more user friendly.
This seems to be a form of testing that is rarely done in practice, too tight a deadline methinks.
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