Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • FrogMan
    • By FrogMan 12th Sep 17, 11:05 AM
    • 4Posts
    • 0Thanks
    FrogMan
    Backdated VAT claim for Software from US
    • #1
    • 12th Sep 17, 11:05 AM
    Backdated VAT claim for Software from US 12th Sep 17 at 11:05 AM
    I purchased PC software (downloaded & Licence) from a US company in May 2017.
    Now 4 months later, they have just sent me a request to pay them the VAT which they failed to collect at the time.
    There is no explanation just a request to pay them for "VAT Compliance".
    I understand VAT is payable for software downloads from Outside the EU.
    I assume the HMRC have caught up with them and now they are hoping to recover their loss from customers.
    Although a small sum - am I legally obliged to pay them after their error at purchase time?
Page 1
    • Pennywise
    • By Pennywise 12th Sep 17, 11:22 AM
    • 9,107 Posts
    • 16,518 Thanks
    Pennywise
    • #2
    • 12th Sep 17, 11:22 AM
    • #2
    • 12th Sep 17, 11:22 AM
    Although a small sum - am I legally obliged to pay them after their error at purchase time?
    Originally posted by FrogMan
    Depends on the exact wording of the order form/website, etc. If it said "$x plus VAT", then yes, but if it just said "$x" then no. Note they will also find it hard to take action against you if they choose the legal route to pursue it as cross-border legal actions are notoriously difficult and expensive. I think they're just trying it on once they've realised they've made a mistake. I'd just ignore them.

    But, is there any way they could disable your software? You may think it's better just to pay rather than risk being locked out of your software or support being disabled, etc.
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 12th Sep 17, 11:41 AM
    • 2,685 Posts
    • 1,511 Thanks
    TheCyclingProgrammer
    • #3
    • 12th Sep 17, 11:41 AM
    • #3
    • 12th Sep 17, 11:41 AM
    Is this Squirrel? Seen lots of chatter about this on Twitter this morning. They are even trying to collect VAT from customers who received the software for free as part of a bundle.

    The short answer is: they can do one. Any liability to pay VAT to a relevant collecting authority (e.g. HMRC) is with the supplier. They have a duty to collect VAT from you though this may be inclusive of the advertised price (which is the normal way of doing things when selling to consumers). The best course of action is to ignore them though if I were you I'd be sending them a strongly worded email about the finer points of VAT and consumer law.

    IMO this has nothing to do with VAT regs (and any implication by the supplier that the customer is obliged to pay this extra VAT in order to remain in compliance with their government's VAT rules is bogus) and everything to do with normal contract/consumer law. The supplier advertised something for a price. You offered to buy it for that price and paid for it. The supplier accepted that offer and payment and sent you the product. The sale has now completed.

    What I suspect has happened: they are a US supplier and have recently discovered they should have been charging VAT to EU customers at their local rate and should have registered for VAT in an EU country under the VATMOSS rules that were introduced in Jan 2015 (technically this VAT treatment has applied for non-EU suppliers since 2003 but that's another discussion).

    They've since registered and had their registration backdated and now find themselves liable to account for VAT on all their sales since that date and as a result have a hefty VAT bill. This is their liability and the only real course of action is for them to treat all sales as VAT inclusive and account for local VAT on the price that was paid (e.g. if the sale was equivalent to £1.20 for a UK customer they would have to treat it as if it were £1 + VAT). Instead they are trying to pull a fast one and trying to con previous customers into paying something they have no obligation to pay.

    This is the email this company is sending out to customers in case anyone was wondering:
    https://twitter.com/CraigGrannell/status/907523025473589248
    Last edited by TheCyclingProgrammer; 12-09-2017 at 11:44 AM.
    • FrogMan
    • By FrogMan 12th Sep 17, 12:50 PM
    • 4 Posts
    • 0 Thanks
    FrogMan
    • #4
    • 12th Sep 17, 12:50 PM
    • #4
    • 12th Sep 17, 12:50 PM
    Yes it is Squirrel. Thanks for the advice.
    • DigForVictory
    • By DigForVictory 12th Sep 17, 1:24 PM
    • 7,009 Posts
    • 18,919 Thanks
    DigForVictory
    • #5
    • 12th Sep 17, 1:24 PM
    • #5
    • 12th Sep 17, 1:24 PM
    If they are saying "Give us the VAT", & it's genuine albeit belated, then pay them & claim it on your next return.

    It's a nasty hiccup to the cashflow but it isn't actually coming out of your wallet.

    Besides which, every visiting VAT officer in the land will learn about Squirrel if it's that big a deal, so if it's ever questioned, you just have the copy invoice in with the current quarter's paperwork & "Ah!" - sorted. This isn't the first VATMOSS generated 'surprise' & it won't be the last.
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 12th Sep 17, 1:26 PM
    • 2,685 Posts
    • 1,511 Thanks
    TheCyclingProgrammer
    • #6
    • 12th Sep 17, 1:26 PM
    • #6
    • 12th Sep 17, 1:26 PM
    If they are saying "Give us the VAT", & it's genuine albeit belated, then pay them & claim it on your next return.

    It's a nasty hiccup to the cashflow but it isn't actually coming out of your wallet.

    Besides which, every visiting VAT officer in the land will learn about Squirrel if it's that big a deal, so if it's ever questioned, you just have the copy invoice in with the current quarter's paperwork & "Ah!" - sorted. This isn't the first VATMOSS generated 'surprise' & it won't be the last.
    Originally posted by DigForVictory
    Assuming this was a business purchase by OP and they are VAT registered (they didn't give that impression) then this would still be wrong because the US supplier should not be charging VAT to an EU based business (normally after providing evidence of business status such as a valid VAT number). Instead the customer should be accounting for VAT on the supply (which is a service) under the reverse charge rules. The VATMOSS rules do not apply to B2B sales.

    If OP is a consumer (which was my assumption) then they should just ignore the demand as its nonsense.
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 12th Sep 17, 3:30 PM
    • 2,685 Posts
    • 1,511 Thanks
    TheCyclingProgrammer
    • #7
    • 12th Sep 17, 3:30 PM
    • #7
    • 12th Sep 17, 3:30 PM
    In am embarrassing and rather disingenuous u-turn they are now claiming it was a request rather than a demand:

    https://twitter.com/squirrels/status/907597427066245120
    • FrogMan
    • By FrogMan 12th Sep 17, 3:43 PM
    • 4 Posts
    • 0 Thanks
    FrogMan
    • #8
    • 12th Sep 17, 3:43 PM
    • #8
    • 12th Sep 17, 3:43 PM
    It was personal purchase. No vat refund available. But just seen the comments on Twitter from Squirrels 'they cannot force you to pay but are grateful for those who do'
    • paul_liverpoolfc
    • By paul_liverpoolfc 12th Sep 17, 8:40 PM
    • 13 Posts
    • 3 Thanks
    paul_liverpoolfc
    • #9
    • 12th Sep 17, 8:40 PM
    • #9
    • 12th Sep 17, 8:40 PM
    I've had this e-mail today also. I'm just ignoring it.
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 13th Sep 17, 10:31 AM
    • 2,685 Posts
    • 1,511 Thanks
    TheCyclingProgrammer
    Actually the law hasn’t changed. US companies selling e-services (which includes software) have been required to charge VAT where the customer is based in the EU since 2003 under the VoES system, not since Jan 2015 when VATMOSS superseded it (and changed the rules so they applied as well to all EU abased businesses). AFAIK there was no threshold for this.

    I’m sorry you’ve been left with a large VAT bill but you only have yourselves to blame for non-compliance. Trying to ask your customers to pay more money to help you settle your debt for something they’ve already bought under the guise of “compliance” is dishonest.
    Last edited by MSE ForumTeam3; 13-09-2017 at 12:00 PM.
    • agrinnall
    • By agrinnall 13th Sep 17, 1:19 PM
    • 18,434 Posts
    • 14,147 Thanks
    agrinnall
    Just to clarify for anyone slightly puzzled by TCP's post, it was in response to a post from the software company which was posted in breach of the forum rules and has now been deleted.
    • rtho782
    • By rtho782 14th Sep 17, 6:25 AM
    • 980 Posts
    • 679 Thanks
    rtho782
    This legislation is idiotic though. It's like Tanzania bringing in a tax, then if I set up a small web business in the UK I have to charge Tanzanians for it and submit it to the Tanzanian government.

    The Tanzanian government have no authority over me and I'd just ignore it.

    Which is what it sounds like Squirrel were doing, and then at some point must have decided to open an EU office or something so had to comply suddenly.
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • antonic
    • By antonic 15th Sep 17, 6:53 PM
    • 1,754 Posts
    • 2,583 Thanks
    antonic
    Tell them to jog on.

    As others have said, if they failed to include the VAT when the sale was made, and now HMRC are now pursuing them for the unpaid VAT , they can *ask* you if you want to pay the VAT but you are not obliged to pay.

    Their mistake so they can pay for it !.
    LBM Sept 2005 spoke to Payplan - brilliant !
    Dec 2005 debt £21.959.64 + HBOS Int £1769.32
    June 2013 debt £0.00
    DF status confirmed by email 10/07/13
    DFW Long Hauler 297
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

173Posts Today

1,277Users online

Martin's Twitter
  • RT @thismorning: 'Sometimes the best gift is releasing somebody else from the obligation of having to give to you' says @MartinSLewis. Do y?

  • Shana tova umetuka - a sweet Jewish New Year to all celebrating. I won't be online the rest of t'week, as I take the time to be with family

  • Dear Steve. Please note doing a poll to ask people's opinion does not in itself imply an opinion! https://t.co/UGvWlMURxy

  • Follow Martin