I currently have a business set up in the U.K. I've been trading for two years now and my company offers website membership to worldwide customers. I was told by my accountant that I didnt need to worry about VAT or register for VAT until i've made something like £52,000 (which i have not yet made, ive still got ages to go before i get there)
But I am very confused about the overall VAT issue and how it works as i've never been involved in VAT before. I've heared about the new EU VAT Directive that takes affect from 1st July 2003, but does this affect me? does the £52,000 threshold still apply? if so, i guess i have nothing to worry about yet. However, I would like to prepare for when the time comes so if anyone can please give me some advise on exactly what is required I would really appreciate it.
Under July 1st legislation, non-EU providers providing services to EU citizens / companies must register for VAT in the countries they supply services to and charge VAT at the appropriate rate for the country in which the service is used - ie, they must register with HMCE and charge 17.5% to UK citizens / consumers / businesses, they must register with the French VAT office and charge VAT at French rates to French consumers / business etc, and so on.
In fact the exact opposite is true. One of the main purposes of the scheme is to avoid that very situation. Quote from HMC website - "To prevent the need for such non-EU businesses registering in every EU member state where they supply customers, this special scheme allows them to register and account for EU VAT in a single EU member state of their choice."