#VATMOSS, #VATMESS, and goodbye to my Bandcamp shop...
Over the past several years many of you have bought music downloads from me - not just through the big guys like iTunes and Maazon, who retail the mp3s of my studio albums, but especially thrrough Bandcamp, where it's been my habit and pleasure to make available out-of-print, topical, rough and fundraising projects.
I'm grateful to all of you who've bought through this site, and am very sad to tell you that I will have to mothball my Bandcamp site at the end of this year.
New VAT regulations negotiated in 2008 and coming into force on 1st January, designed to prevent large corporations from shifting their businesses around to the most tax-advantageous EU country, mean that from that date, all digital 'services' (music files, image files, word files etc) that are sold online from anywhere in the world into the EU, will need to include VAT sold at the rate appropriate to the *buyer*, not the seller.
The rules as written have taken no account of the nano-businesses run by artists, musicians, knitting pattern designers and the like, and means that we will now be obliged to ascertain the country of each customer and keep their data for ten years, unless we are fortunate enough to sell through a third-party platform which will handle the VAT for them.
The big guys of course, Amazon and itunes, have no difficulty with this...
Smaller and niche platforms? - are as shocked and unprepared as we are, it seems.
Bandcamp has answered frantic queries from musicians like me with a 'we will reply soon' message, and no more. Their terms and conditions state that they do NOT handle tax, and that tax remains the responsibility of the artist.
This runs counter to the HMRC's advice and assumptions - but the HMRC is struggling to grasp the scale of this both ways, and they failed singularly to communicate both with this whole sector of business, and it seems, with the more niche of the third party platforms too. They've concentrated on businesses already registered for VAT - because they didn't, apparently, realise we exist!
HMRC didn't grasp the actual size of nano-businesses employing the artist and nobody else, kitchen-table operations that may be augmenting a pension, or a full-time job, or that may be preventing somebody from claiming benefits.
They also don't seem to know how many - how VERY many - tiny businesses are about to be clobbered by an administrative burden that they cannot, simply cannot bear. Tens or hundreds of thousands? And how many still have no idea that they're about to be responsible for VAT on their sales into the EU?
Musicians and artists and writers who sell online this way aren't making hundreds of thousands of pounds a year. Some of us may make £30k, others £10, others £1k. Even if I only made one pound from a download into Europe - and Bandcamp doesn't allow me to choose which territories I sell in, and European discrimination laws may in any case prevent that option - I will still be liable for charging VAT at the rate of the customer's own country. Assuming I can verify it with them, that is, with multiple pieces of non-contradictory evidence.
I doubt I'll ever sell enough music to hit the UK's VAT threshold in the normal manner, but this - this means I will have to stop selling online.
Oh, and they intend to roll it out to physical sales from 2016 as well, so be warned. Which means that using resources to make CDs rather than selling mp3s will not long be a solution either.
Innovation, creativity, independence - forget it. Business are closing. We can't do this. We simply can't.
Bandcamp (and other smaller platforms) aren't talking to their customers, the HMRC are hedging, and the media largely aren't interested.
So I'm mothballing my mp3 shop at the end of the year. It's been fun while it lasted.
If this makes you as unhappy as it makes me - and many writers, artists and knitting pattern designers in the community - please spread the word, sign the petition, and do what you can to raise your voice.
Nobody intended this effect, it seems, not in Europe or Westminster - but we were too small to see, it seems, selling items the lawmakers probably don't even know exist, for sums they wouldn't open their eyes for, never mind get out of bed.
We've been thrown to the wolves.
Here are the links you'll need for a bit more background:
First, the fightback - lots of useful info here:
http://euvataction.org/2014/12/12/vat-a-mess-new-eu-tax-rules-set-to-close-small-businesses/
Then, the petition: (please sign wherever in the world you are!)
https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders
The action group's blog:
https://digitalmicrobusinessactiongroup.wordpress.com/about/
...and SouthWest MEP Molly Scott Cato gets it:
http://mollymep.org.uk/2014/12/10/call-for-government-action-on-new-vat-regulations-threatening-south-west-micro-businesses/