How to adapt to the new UK VAT rules on digital services

VAT has always been applicable on digital services for business registered for VAT but what has changed is that the place of supply which was deemed to be the location of the supplier, is now deemed to be where the customer resides. This is what is behind the change and I can see where this train of thought comes from considering the virtual world we now live in.

There is a currently a way around this for some digital services such as online courses. If there is more of a virtual classroom involved and you, the supplier, living in the UK, has to assess their work then that is ok and is exempt from the new rules. However if you sell an online course and there is no interaction between you and the customer, other than emailing the details to them and a little after sales/ course feedback then this would be deemed to fall under the new rules.

If this encourages business to include more interaction on their online courses , I actually think this is a good thing.  So many of us hide behind websites, where we very rarely interact with the people behind a business nowadays, unless of course we have a complaint! It started with a few online sales which soon moved into the supermarket, and nowadays we can go through a day, if not a whole week without interacting with a real person. Truthfully anything that moves away from that, back to a little human touch, I believe is a good thing.

Sadly the new rules will affect downloads and ebooks too and its a major administration headache for sellers of these products if you sell direct, but perhaps its the price to pay (albeit a high one for small businesses) for bringing the human touch back into our interaction with businesses. Although I think there is a general consensus that a bit more notice would have be good! I also believe HMRC are reviewing the rules for small business in light of the complaints so far.