EU VAT One-Stop-Shop to launch in July 2021

The European Commission, in response to the challenges created by the Coronavirus pandemic, has decided to postpone its new European VAT rules for business-to-consumer (B2C) transactions until 1 July 2021.


These new rules are part of the EU’s new e-commerce package and will look to introduce a VAT One-Stop-Shop (OSS) for B2C sales.


Originally due to come into force on 1 January 2021, the main aim of this package is to simplify VAT obligations for companies carrying out cross-border sales of goods and services (mainly online) to consumers. This will ensure that VAT on is paid correctly to the Member State in which the supply takes place


The current rules


Under the current EU rules, businesses from outside of the EU are typically required to register in each of the various Member States to which they supply goods or services to report and pay EU VAT at various rates on their sales.


Businesses offering B2C digital services can already use the Mini One-Stop-Shop (MOSS) to declare the VAT due on their supplies in a single quarterly VAT return, by only registering in one EU Member State.


However, no such declarative system is available to those selling physical goods, which means that imported goods from non-EU countries with a value above €22 (£15) must register for VAT in each EU member state and make the necessary declarations.


The new rules


From 1 July 2021, the EU will create a similar One-Stop-Shop (OSS) for B2C suppliers of all services and goods, which will remove the requirement for a business to have multiple VAT registrations and reporting obligations in the EU.


At the same time, the distance sales threshold will be abolished and replaced with a common threshold of €10,000 (£8,600) throughout the EU up to which B2C EU cross-border supplies remain subject to the VAT rules of the Member State of dispatch, and above which supplies become subject to the VAT rules of the Member State of destination.


Under this new system, a single report scheme covering sales of imported goods to EU consumers up to a value of €150 (£135) and for which a VAT exemption upon import, will apply if the trader declares and pays the VAT at the time of the sale using the Import One-Stop-Shop (IOSS).


The new package of legislation from the EU will also open the possibility of paying import VAT on customs declarations via a simplified monthly payment.


Who do the new rules affect?


The new rules will affect suppliers outside the EU as follows:


Suppliers of services to EU consumers – Various VAT rates currently apply to the sale of their services depending on the nature of the supply and the place of residence of the clients or customers.


However, from 1 July 2021 businesses could use the OSS to lighten their reporting obligations. The choice of the EU Member State where they could register for the OSS will depend on where they and their customers are established or based.


Sellers of goods to EU consumers – These businesses will see changes to their reporting obligations and potentially their profits.


Where a seller is a small business selling less than €10,000 (£8,600) per annum of goods and services to consumers in other Member States, they will be able to charge domestic VAT and report their sales below this threshold in their regular domestic VAT return.


If they are a B2C seller dispatching their goods from a single EU Member State, they will no longer be required to register for foreign VAT or complete multiple VAT filings in the EU Member States where they are selling their goods. Instead, they can opt to file a quarterly return under the OSS alongside their regular domestic VAT return.


Importantly non-EU sellers, including the UK (post-Brexit) can use the OSS to register as a “non-Union” taxpayer with the tax authority of the EU Member States of their choice, except where they already have fixed establishments in the EU.


This means that they could file quarterly returns under the OSS and only file a regular domestic VAT return in just one EU Member State where they are registered, instead of across multiple states under the current rules.


In some EU member states, online marketplaces, such as Amazon, are deemed the supplier of the goods, which may mean that some online sellers could de-register for VAT in certain EU Member States if they only sell via these marketplaces, as it will be the responsibility of the marketplace to collect the VAT at the time of the sale.


Steps to consider


Here are some important steps that you may need to consider under the OSS:


VAT Compliance – The OSS should reduce compliance costs by allowing businesses to use a single VAT return and registration in just one EU member state. In some cases, it may be necessary to appoint an intermediary or fiscal representative in a member state, who will report the sales on behalf of the seller and account for the VAT.


Procedures – Sellers must update their procedures and systems to recognise the VAT status of their clients, the countries of import, dispatch and/or arrival and capture the VAT rates applicable – be aware that there are more than 80 different EU VAT rates.


Trading via online marketplaces – If you trade via an online marketplace, like eBay or Amazon, you should review your contracts with these organisations to ensure that VAT accounting responsibilities are clearly defined.


Pricing – Goods might be subject to the VAT rate of the Member State of destination of the goods, whereas up until now, it might only be the case when national thresholds are exceeded, which means that the sale price or the seller’s margin will vary. With low consignment relief due to be abolished, VAT will be due on those sales at the rate applicable in all EU countries of sale. This will also impact the price and margin of the products.


Businesses must prepare now for these changes in July to ensure they are ready to implement the OSS, should they choose to use this simplified VAT system. If you need advice on what these rules mean for you and your business, please contact us.

Company tax returns and accounts have gone digital

By Charlie Flockhart • April 21, 2026
HMRC and Companies House have confirmed that from 1 April, all businesses must use compliant, commercial software to file their company’s tax returns. As of 31 March, the free joint online service, commonly known as the CATO portal, from these two Government bodies has been removed and you must now use software to file company tax returns to HMRC. For the time being, you will still be able to file annual accounts at Companies House using third-party software, WebFiling services or paper filing. The decision has been made to end this service as it is “outdated and no longer aligns with modern digital standards”, according to Companies House. This change is in line with the introduction of the Economic Crime and Corporate Transparency Act, which implemented “enhanced corporation tax requirements and changes to UK company law.” It also follows on from a major IT security breach at Companies House, identified in March 2026, that exposed the WebFiling system and allowed some users to potentially access and amend the details of other companies. Although the breach has now been resolved and security strengthened, it has raised concerns about the reliability of GOV.UK One Login service.  Can you still amend previous returns using the free service? HMRC and Companies House have confirmed that now that the free filing service has closed, company directors will have to use commercial tax software if they need to make changes to a previously submitted Corporation Tax return or refile a rejected return. From now onwards, any previously filed financial information will no longer be available in the system, as it has not been retained and will need to be entered again. HMRC has said that, for amendments, it will also be acceptable to send a paper return to the Corporation Tax Services office. If you have previously filed financial accounts with Companies House and you want to make changes or corrections, this will also need to be done via commercial software or by sending paper accounts to Companies House via post. Are there any exceptions to this new rule? Companies can file a paper Corporation Tax return only in limited circumstances, such as if they wish to submit it in Welsh or can demonstrate a valid, reasonable excuse to HMRC. Otherwise, returns must be filed online using commercial software. If you are affected by this change and need help choosing and utilising commercial software to complete your Corporation Tax return, please speak to our team.

Capital allowances - New rules for a new tax year

By Charlie Flockhart • April 21, 2026
Capital allowances continue to provide an effective method for businesses to reduce their tax bills, by providing incentives for investment in eligible expenditure – typically plant and machinery. Historically, these reliefs have been subject to change and the 2026/27 tax year is no different, as the Government moves to alter two key reliefs – Writing Down Allowance (WDA) and a new First-Year Allowance (FYA).  Reduction of the Writing Down Allowance The WDA will be reduced from 18 per cent to 14 per cent on the main pool of qualifying plant and machinery assets. This change has been introduced on two different dates, starting with companies subject to Corporation Tax on 1 April and followed shortly thereafter by those subject to Income Tax, such as sole traders and partnerships, from 6 April. Businesses with large brought forward main pool expenditures are expected to lose the most from the reduction in the main rate of WDA. In the long-term, the change may also reduce incentives for investment in second-hand assets and cars, which benefited under the previous rules. The new First-Year Allowance To offset some of the impact of the reduction in WDA, a new 40 per cent FYA on main rate expenditure, primarily still covering plant and machinery, will now be available. This new FYA is intended to encourage investment in areas where other FYAs don’t allow, in particular, assets bought by unincorporated businesses and leases. Sole traders and partnerships will, for the first time, be able to get additional support at the point of investment, which means that more businesses will be able to reduce their tax bill in the same year as their investment. This is expected to give a quick cashflow boost to those affected and provide additional support for future investments. However, it is important to note that this FYA does not support investment in second-hand assets, cars or leased assets in other countries. Finally, the Government has also confirmed that small business owners will continue to benefit from tax relief on electric vehicles, as the 100 per cent FYA for zero-emission vehicles and charge points has been extended until 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax. This gives businesses greater certainty when planning ahead, while also providing a strong financial incentive to invest by reducing tax bills upfront. Want to make more of capital allowances? If you think you may be eligible for capital allowances, either due to the changes outlined in this article or more generally, then it is important that you claim the tax relief available to you. If you would like help reviewing the current capital allowances that your business can claim, please get in touch.

Government abolishes work-from-home relief

By Charlie Flockhart • April 21, 2026
Directors and employees claiming work-from-home tax relief will no longer be able to claim it from the start of the new tax year – 6 April 2026. Why is this relief being taken away? The Chancellor announced the removal of the work-from-home relief as part of her latest Autumn Budget. The main reasoning given for the abolition is that it will support the nation’s deficit reduction. HMRC has also said that it no longer believes it is fit for purpose or easy to police. Who could claim work-from-home relief? Work-from-home relief has been utilised by homeworkers since the early 2000s, helping them offset some of the costs of heating, lighting, broadband and other home-office expenses required to complete their jobs. The relief allowed employees and directors to claim a flat rate of £6 per week or a deduction for actual costs. However, those who do not claim the flat fee were required to provide evidence of the exact costs, such as an invoice or bill. Eligibility for the relief only applied to individuals who had no other choice but to work from home. For instance, where the business did not have an office or the daily commute was not feasible. Individuals who simply preferred to work from home did not qualify. Is there any relief still available for home workers? The only remaining tax-free support will be reimbursements made directly by employers. This applies only where the payments relate to demonstrated additional household costs and where the costs are incurred wholly, exclusively and necessarily for employment duties. For anyone still claiming work-from-home relief, it is worth reviewing your position now to understand how this abolishment will impact your take-home pay.