To give it its full name, this stands for Mini One Stop Shop – although why HMRC would want to associate themselves with a corner shop, we’ll probably never know.
The concept, however, has its roots in the behaviour of the largest companies in the world. It probably started with internet providers, many in the USA, who were providing their services to private individuals in the UK. So, there we had it – a USA company, no established address in the UK, no need to charge VAT. Excellent plan! It wasn’t just internet providers, it was anyone providing digital services from outside the EU. So, the EU took the huff and decided that any business in this scenario must register for VAT, somewhere in the EU. OK, so they registered in Madeira or Luxembourg or anywhere else that had an equally low rate of VAT. So it went on, as ever, the multi-nationals paying lower taxes than everyone else. That was, until someone in the EU said, hang on a minute, the playing field is still not level. So the rules were changed again, from 1 January 2015 and the crucial step – the one before MOSS – is that anyone providing digital services to private individuals within the EU, must register in any Member State where those sales are made. That way, the correct rate of VAT will apply wherever you sell your products – but importantly, no matter what level of sales you have.
Stop for a moment, though, if you sell one digital product, in every Member State, you have to register for VAT in all of these countries. Not a happy prospect, I think you will agree. This takes us back to MOSS and in essence it allows a UK business to register once (for MOSS), instead of registering individually in each country to which they supply their digital products.
I’m not going to give you all the answers here, as it would take too long. There is a wealth of information online about it online (good and bad), but one astonishing feature of MOSS is that, whilst you have to be UK VAT registered to join the MOSS system, HMRC have agreed that a UK business trading below the VAT threshold can register for VAT, but only in respect of their EU sales that are caught by the 1 January 2015 changes. I’m not sure about the legality of this, but there you go.