UK: HMRC outreach to businesses in technology, media, and telecommunications sector regarding VAT compliance
Sellers of telecommunications, broadcasting, and electronically supplied services to consumers in the UK are liable to register for, collect, and remit VAT.
HMRC have recently started reaching out to businesses in the technology, media, and telecommunications sector asking them to confirm that they are complying with UK value added tax (VAT) rules.
Under those rules, sellers of telecommunications, broadcasting, and electronically supplied services to consumers in the UK are liable to register for, collect, and remit VAT.
In this respect, HMRC’s notice asks businesses to confirm the following points:
- \Whether their sales of services are within the UK and their VAT is correct
- Whether they sell services sourced outside the UK and have found no errors
- If mistakes were made and the VAT is incorrect, the VAT periods this affects, and the amount of VAT owed
HMRC further requests businesses to confirm that they have a greater awareness and understanding of the UK VAT sourcing rules, that appropriate processes and controls are in place to mitigate this risk going forward, and that the risk (if any) has been added to your tax risk register or similar document for ongoing review and quality control.
KPMG observation
HMRC, as other tax authorities with similar rules, appears to be shifting its focus on the enforcement of VAT rules aimed at the digital economy. While these notices do not constitute a formal audit, HMRC may use the answers in future audits, especially when considering the application of penalties. Therefore, business must answer HMRC’s queries but need to carefully assess the information provided to HMRC, including the confirmation statements.
For more information, contact a KPMG tax professional:
Tim Jones | tim.jones2@kpmg.co.uk
Philippe Stephanny | philippestephanny@kpmg.com