Government admits total defeat in its efforts to protect small businesses from Brussels' new demands on VAT
"For now these new VAT demands apply only to online services. The European Commission has plans to apply these demands to all services, perhaps as soon as 2016" - UKIP MEP Margot Parker MEP, UKIP skokesman for small business
• From January 1st all small business entrepreneurs who sell online across the EU will be forced to register for VAT.
The new regulations were designed to take more VAT from online giants such as Amazon but will now load new regulations and burdens onto small businesses.
Online microbusinesses which sell anything to EU customers will be forced to register for VAT even if their turnover is under the £81,000 threshold.
A spokesman for the UK Permanent Representation to the EU admitted today: "The UK argued strongly for cross-border threshold so that the smallest businesses would be outside the system, there was no support from other Member States or the Commission."
Government admits it is powerless to reverse the changes. In a briefing for MEPs, the spokesman said: "We have to be realistic here. We can't do anything without a proposal from the EU Commission and the unanimous agreement of all 28 member states." (See email attached).
Margot Parker, UKIP MEP for the East Midlands and spokesman for small business, said: "The EU, in its relentless desire to increase its take from VAT, is determined to load more VAT demands on the shoulders of British entrepreneurs. This new Brussels tax grab will without doubt force thousands of micro-businesses to shut down.
"The new system begins on January 1st. For weeks now, the Treasury and Revenue have been assuring worried micro entrepreneurs that Government negotiators would secure a better deal for them in Brussels.
"Today we see those assurances have been worthless. The regulations, meant to stop giants such as Amazon taking advantage of the tax-haven the new Commission president Jean-Claude Juncker set up in his home country of Luxembourg when he was prime minister, may now sweep up and destroy thousands of small businesses. These businesses, which often operate out of the spare room of a family home, sell everything from knitting patterns to digital novels to self-help courses to apps to herbal supplements online.
"Worse, of course, is yet to come. For now these new VAT demands apply only to online services. The European Commission has plans to apply these demands to all services, perhaps as soon as 2016. All the more reason for the UK to get out of the EU and its grasping and complicated VAT regime."