UKNM: VAT and trading locations - RE: UKNM Digest V1 #115

[Steve Johnston/IMRG]

Craig Pickup wrote:


>This may also apply to the actual e-sales as the point of sale is the  location

>of the server not the customer. Therefore UK law relating to sales and VAT  do

>not apply if the server is located in the US.


The point of sale is actually the desktop of the customer. If a UK company 

is selling to a UK customer, it has to charge VAT (If the product is 

vatable). Period. The argument that the server was in a non-vatable country 

will not stand up to even the slightest examination. The difficulties, 

however, arise when companies trade with consumers internationally.


Presently there is no formal agreement, between anyone, about whose VAT 

should apply, there are a number of arguments about country of origin and 

country of consumption, but common sense and market example is likely to 

prevail. 


Look at CDnow, previously they left the problem with the consumer, so on 

occasion, having bought your super-cheap VAT-free CD from the US a nasty 

surprise would arrive in the shape of a DHL bill for VAT on behalf of UK 

Customs & Excise and a small(ish) handling charge for DHL's trouble. This 

didn't happen too often, and the volumes were such that it wasn't causing 

any meaningful customer problems. 


You go to CDnow now and buy from their European centre, you will get UK VAT 

added to your bill prior to shipping. So you are buying from a US firm with 

a base in Holland and yet are paying UK VAT. 


The answer lies in the customer experience and scaleable models. The 

tin-pot past had little of the first and none of the second. 


Steve Johnston

Director of Development 

The IMRG


www.imrg.org

07000 46 46 74


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