ARTICLE: Selling Downloads of Your Music In The UK? Read This:

I’ve been somewhat aware of this for a while now, and couldn’t quite believe that a piece of legislation so utterly insane was actually going through.

The laws around paying VAT (Value Added Tax) and ‘Supplying Digital Services‘ within the EU are changing, as of January 1st 2015, and it may well affect you. Here it is, as I understand it thus far (I asked the Musician’s Union what their position on this is and they say they’re going to be providing info to members in December). If you have more info, please include it in the comments. 

WHO DOES THIS AFFECT? Anyone who sells music downloads (or eBooks/videos/any other digital product) off their own website. 

WHAT DO THE CHANGES MEAN? For a full exploration using software companies as an example, see this brilliant post by Rachel Andrew.

In short, the arrangements around selling digital products to people in the EU are now defined by the country the customer is in rather than you. Meaning you’ll need to be registered for VAT no matter how much you earn, if you sell your music direct from your website. This means you’ll have to charge (and pay) VAT on ALL your work unless you set up a company to sell your digital products that’s distinct from your self employedbusiness as a musician/teacher etc. You’ll also have to file a quarterly VAT return (which is WAY harder than a self assessment form). In short, it’ll ruin your business. 

IS THERE A LOOPHOLE? YES. 

This is the important paragraph on the government’s page describing the new arrangement:

If you supply digital services to consumers through an online portal, gateway or marketplace then it’s important to determine whether you’re making the supply to the customer or to the platform operator. Where the platform operator sets the general terms and conditions, authorises payment or delivery, or doesn’t clearly state the name of the supplier on the receipt or invoice issued to the consumer, then they’ll be seen as making the B2C supply even if they’re contractually only an agent.

What this means is that if you sell your music via another service, you’re OK. If you sell it via a ‘hand-rolled’ site (off your own server with your own CMS), you’re screwed. So this means thatiTunes, Amazon and crucially Bandcamp sales are all exempt. Those sites are all platforms that“set the general terms and conditions, authorise payment or delivery” .

So, if you sell your music direct from your site, you may want to switch to Bandcamp for your sales, or get your VAT situation in order. The same goes for eBooks (I use Leanpub) and Video (any suggestions, please put them in the comments)

You may also want to sign this petition to provide an exemption to this very, very stupid piece of legislation. Cos it’s going to royally mess things up for so many creatives and small businesses.

Source: stevelawson.net