Nominet

This is an update on
our recent
correspondence with UK Revenue & Customs (HMRC) regarding the VAT
treatment of the services we provide. 

An EU Directive "VAT on E-commerce" came into effect on 1
July 2003 and UK legislation was amended from the same date.  This
legislation affects the VAT treatment of electronically supplied
services for some customers who are based outside the UK. 

We have always charged VAT on all our chargeable services, regardless
of where the customer is based (i.e. whether in the UK, other EU
countries or the rest of the world) and this was confirmed as the
correct VAT treatment by a ruling from HMRC in 1998. However, we now
believe that is it likely that some, if not all of our services are
affected by this change in legislation.

Following several months of correspondence with HMRC, the matter was
referred to their central policy unit in April 2005. We subsequently
received a ruling that all but three services are unaffected by the
change in legislation. We believe that this decision was based upon a
misunderstanding of our services and we have therefore appealed the
decision. It is important for us to receive an unequivocal answer
because of the resource implications of changing our invoicing system,
and the potential impact on some of our customers. 

We hope to receive a response from HMRC within the next few months and
will provide a further update as soon as it is available. 

In the meantime we will continue to charge VAT on all our services
regardless of where our customers are based. In the event that HMRC
rule that some of our services are affected by the change in
legislation, we will be able to offer refunds on the VAT already paid
if the customer has not already reclaimed the VAT themselves directly
from their own country's VAT office.  VAT will only be refundable if
and when the changes to our invoicing system have been implemented.

If you have any queries regarding this, please contact our member and
tag holder support team on 01865 332233 or by e-mail to support 
at nominet.org.uk