Important point for UK users and Logos arising from this week's Budget

This week the UK government announced its Budget for the coming fiscal year. In among the changes was one that could be significant for us: the UK Government is to make digital downloads purchased by users in the UK taxable in the UK from January next year. That means VAT (sales tax) of 20% on all products that are subject to VAT. I don't know how Logos products would be classified: we pay 20% VAT on software, but 0% on books: I suspect HMRC would argue that Logos products are software, because they can be like that. It does, however, mean a number of things:

It is very likely (depending how they're classified) that the price of Base Packages will go up by 20% for UK users on 1st January next year. That makes it worth getting that upgrade before then!
If that's the case, it would be worth Logos undertaking a major marketing campaign in British Christian circles to recruit new users, because it could be about to get a whole lot more difficult.
For those of us who do buy resources, a Payment Plan is suddenly a better option for that commentary series, collection, or sundry resources (or whatever) than a 20% price hike!
If Logos does do a promotion, it would be worth letting existing UK users know: I know I have a number of people who are thinking about buying Logos, for whom an impending 20% price hike could be quite an incentive!
It would also be really helpful for Logos to clarify for existing users whether the UK HMRC (Her Majesty's Revenue and Customs) will classify purchases of resources as books (0% VAT) or software/service downloads (20% VAT).
I know Logos is currently in the process of recruiting a UK Product Manager, but this probably needs to be dealt with before that point, otherwise recruiting new users will be more of an uphill struggle.

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Comments

Graham Criddle

Hi Greg

Thanks for posting this - interesting.

I went and checked and the budget document states:

"As announced at Budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the Member State in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue."

So some of the further questions which this raises:

with legislation being required no-one probably knows what the real impact is yet
the fact that this is shown as being related to "intra-EU business to consumer" transactions means it might not apply to Logos purchases - as that is directly from the US

Graham

Matthew C Jones

https://community.logos.com/discussion/comment/578561#Comment_578561

I am not in the UK so I know very little about this. Could the tax be avoided if Logos had a representative living in the UK?

Graham Criddle

https://community.logos.com/discussion/comment/578574#Comment_578574

Could the tax be avoided if Logos had a representative living in the UK?

As above until we see the legislation we won't really know.

I have a suspicion that with Logos just having a US-presence it might not apply (I think this is primarily targeted at companies who have a sales presence in the European Union but not in the UK).

But this is just speculation on my part[:)]

Mike Pettit

https://community.logos.com/discussion/comment/578576#Comment_578576

It is my understanding that VAT should be charged at the moment, but without a presence in the EU there is no one to collect it off. It is up to Logos whether it chooses to abide by UK law or not.

Matthew C Jones

https://community.logos.com/discussion/comment/578589#Comment_578589

but without a presence in the EU

Pardon my ignorance, is South Africa part of the UK? Logos has a presence in South Africa.(unless this has changed.)

NB.Mick

https://community.logos.com/discussion/comment/578595#Comment_578595

but without a presence in the EU

Pardon my ignorance, is South Africa part of the UK? Logos has a presence in South Africa.(unless this has changed.)

I'm not sure if it's maybe part of the Commonwealth, but it's definitely not part of UK but a sovereign state.

Mike Pettit

https://community.logos.com/discussion/comment/578605#Comment_578605

but without a presence in the EU

Pardon my ignorance, is South Africa part of the UK? Logos has a presence in South Africa.(unless this has changed.)

I'm not sure if it's maybe part of the Commonwealth, but it's definitely not part of UK but a sovereign state.

This old article is interesting:

http://www.smallbusinesscomputing.com/emarketing/article.php/2194821/EU-VAT-New-Tax-Headache-For-US-ECommerce.htm

When we had a Camp Logos in London it did amuse me that Morris was generating all sorts of tax liabilities by selling Logos resources in the UK but I presume that he just left and did not file any returns.

I would suggest that acting for Logos in the UK would be less than wise given the implications for acting as an agent for a company that has outstanding liabilities would be, to say the least, fraught with danger.

Jack Caviness

https://community.logos.com/discussion/comment/578589#Comment_578589

without a presence in the EU there is no one to collect it off. It is up to Logos whether it chooses to abide by UK law or not.

Guess they could do as North Carolina. Our State Income Tax form has an entry field for reporting purchases made outside the state so that we can pay the sales tax. Would be interesting to know what percentage of taxpayers actually voluntarily provide this information [^o)] "I'm not paying enough tax, please charge me more" [8-|]

MJ. Smith

https://community.logos.com/discussion/comment/578616#Comment_578616

it did amuse me that Morris was generating all sorts of tax liabilities by selling Logos resources in the UK but I presume that he just left and did not file any returns.

Why did you make that presumption rather than assume that he hired a consultant to handle the taxes, work permits etc. as most conferences do? BTW Morris is independent not part of Logos.

Mike Pettit

https://community.logos.com/discussion/comment/578630#Comment_578630

it did amuse me that Morris was generating all sorts of tax liabilities by selling Logos resources in the UK but I presume that he just left and did not file any returns.

Why did you make that presumption rather than assume that he hired a consultant to handle the taxes, work permits etc. as most conferences do? BTW Morris is independent not part of Logos.

Because

He was getting people to sign up for base packages that would have required huge tax payments if they had been properly reported such that any reasonable commission he was earning would have been wiped out by both direct and indirect UK tax liabilities.
The prices charged were list prices that were available direct from Logos, so there was no margin to absorb any additional tax liabilities.
Everything, including cash sales were in $

GregW

https://community.logos.com/discussion/comment/578595#Comment_578595

Pardon my ignorance, is South Africa part of the UK? Logos has a presence in South Africa.(unless this has changed.)

I suggest you don't go to South Africa any time soon! South Africa is a sovereign state, and is a republic with a President. It has returned to the Commonwealth since the abolition of apartheid, but is not in any way part of the United Kingdom of Great Britain and Northern Ireland, as it is known technically.

Rosie Perera

https://community.logos.com/discussion/comment/578659#Comment_578659

Pardon my ignorance, is South Africa part of the UK? Logos has a presence in South Africa.(unless this has changed.)

Nope. The United Kingdom is comprised of England, Scotland, Wales, and Northern Ireland. South Africa has never been part of that.

And to further the geography lesson, Great Britain consists of the largest of the British Isles, and comprises England, Scotland, and Wales.

The British Isles include Great Britain, Ireland (which includes the Republic of Ireland, and Northern Ireland which is part of the UK), and a bunch of smaller islands.

The British Empire was a collection of dominions, colonies, protectorates, mandates, and other territories ruled or administered by the United Kingdom. It no longer exists.

South Africa is a former British colony and is a member of the Commonwealth of Nations, a voluntary organization, made up mostly of former British colonies.

Sixteen Commonwealth nations share their head of state, Queen Elizabeth II, as Commonwealth realms. South Africa is not among them, though it was formerly, from 1931 to 1961.

And it gets more complicated. There are British Overseas Territories and Crown Dependencies (which are distinct from each other, and neither of which are part of either the UK or the Commonwealth). I'll let you look them up yourself.

I needed to do that exercise for myself, because I sometimes get confused about it all. When is it OK to call someone British, for example? Or, in Monty Python lingo, " 'oo are the Britons?"

abondservant

https://community.logos.com/discussion/comment/578648#Comment_578648

it did amuse me that Morris was generating all sorts of tax liabilities by selling Logos resources in the UK but I presume that he just left and did not file any returns.

Why did you make that presumption rather than assume that he hired a consultant to handle the taxes, work permits etc. as most conferences do? BTW Morris is independent not part of Logos.

Because

He was getting people to sign up for base packages that would have required huge tax payments if they had been properly reported such that any reasonable commission he was earning would have been wiped out by both direct and indirect UK tax liabilities.

The prices charged were list prices that were available direct from Logos, so there was no margin to absorb any additional tax liabilities.

Everything, including cash sales were in $

The more base packages he sells the more training camps he can sell.

The better Logos does, the better his business does.

It is in his own best interest then to sign people up for base packages even when he receives little or no profit from the sales of the Logos product.

David Carter

https://community.logos.com/discussion/comment/578673#Comment_578673

When is it OK to call someone British, for example?

Usually when they are Scottish, Welsh or Irish and are good at something. Jackie Stewart or Andy Murray for example [:D][:D]