UK VAT Law

Ah, wonder if there's a time limit they are allowed to update all that info once they start charging you guys VAT?

Interesting... mine is completely the opposite. Still I have an island fee due today, so I'll see how that's handled... fortunately my other two got billed late but "before the lock" so to speak.....

Inc

Are you suggesting that LL have been given notice and time to comply? Surely not!

My island was billed the 26th, fell lucky there.

At which point, LL said "VAT? Sorry we don't have that here".

I have yet to read anything about how such EU laws can be enforced on a SF based company. Does anyone know?

And also this..... if taxes on internet services are against Federal law in the US, how come LL is imposing internet taxes on EU residents?

I ask these questions because I cannot see the logic yet.

Richard

May I direct you to the many other threads on this topic where your quite reasonable questions have been answered ad nauseam... even if the answers haven't been listened to.

Inc

They have opened an office in the UK. It would be difficult for them to do business here and continue to ignore the laws. They also wouldn't be able to claim VAT back for the expenses they incur in their UK office if they didn't comply with VAT laws.

And shortly put, it has nothing to do with the office in Brighton. It's because the service is provided to those living within the boundaries of the applicable VAT. My honest to goodness guess, and this is ONLY a guess:

LL was finally served to start charging VAT immediately or be subject to fines and legal fees. So they start charging immediately and start charging you when the coders were able to implement it by address.

Totally theory of course. *tin foil hat off*

Inc - I just spent over three hours reading over 250 posts. I was looking for a break and a short answer.

Ciaran - yes, the Brighton office. But alienating so many thousands of people in the UK must surely result in less income (I won't be renewing my Premium account, for example) than claiming back a few quid in VAT for office furniture and the like?

I've made quite a few posts that actually cite references on why/how this happened, but here's the short version in one page:
/327/77/214072/2.html

Any other questions I'm sure could come up, you'll find answers by me in the other posts. (Like why don't people in New York have to pay tax, etc.)

LL as an American company could quite rightly stick two fingers up at the EU if they had not moved to an office in Brighton. Whereas the law does state that services provided from outside the EU are subject to VAT, enforcing it on someone who doesn't have a presence in Europe would be nigh on impossible. Fines? Legal fees? The EU have no jurisdiction there. The EU might have threatened to block SL, but they'd have had a right game trying to do that.

Obviously LL are getting something out of the office in Brighton to make this all worthwhile. Quite what that is at this moment in time is certainly a mystery.

Ok once more with feeling ...

From the Trading Standards Authority:

"Offences
If the seller is in business (rather than a private seller), he may have committed a criminal offence if he:
..snipped..
* advertises a misleading price;"

That's your statutory rights as a UK consumer. As it says "criminal" I'd imagine the OFT or some such body would be interested in following it up even if the company is based in America.

Quite aside from the web pages still quoting costs excluding VAT and failing to mention it, we not only saw an advertised "misleading price", but were expecting to pay that advertised "misleading price" right up until a few days before payments were due. And since tier costs are calculated for the previous month, there was no way you could tier down to avoid the increase in the "misleading price".

And yes. It really does say "criminal".

Sighs and shrugs ... apparently people aren't bothered by a criminal act these days ...

Hop over to the url for the thread I just posted here, and read page 2 and 3. I actually explain the reasoning behind it, and conflicts what you believe, with sources. I'm honestly not trying to make people look stupid, and I don't mind people fighting for what they believe in, but they need to know facts.

From what I can see, historically "The Sky is falling", "You'll lose money when people cancel memberships" hasn't happened. I was just reading an old blog from last year when they increased private island prices, the sky didn't fall, membership and tier fees didn't collapse.

LL are banking on this being the case again and they're probably right.

LOL, you know what's funny, I posted that same thing sorta. Some Euro member (can't recall the name) actually stated that 60% of SL is European subject to VAT and when they all cancel LL will go down.

I said people said the same thing with Island hikes, tier hikes, gambling ban, age play ban (sorta ban), open enrollment, age verification, mature verification, stipend reduction and elimination. I've seen around 50 events that people said would make LL close and we're still here.

Page 5 and 6 actually but your whole reasoning falls over because this VAT law is four years old. Ergo, it's difficult to enforce. Which is what I said

It's a little different this time as the extra cost isn't on everyone. If you are in Europe and in the land business either as buying and selling or renting, it's just not possible to compete with those who have lower overheads. From what I gather you don't make much profit on land renting in the first place. The extra tier fees are going to eat away the profit.

I don't have a huge business, just 1/4 sim, but it does mean I have to make a few thousands lindens a month more now to cover the tier costs at a time when sales aren't at their best in SL anyway. I can't put my prices up to cover the extra fees as have to compete with similar business in the rest of the world.

Well it's over 80 dollars a month for me, if I can't afford it I'll sell up. However me selling up won't hit LL in the pocket because someone else will be taking over my fees.

Of course membership fees could drop significantly, but I really don't think that's going to happen.

At times I wonder if part of SL is a social experiment to see how far they can get with poor customer service and still keep growing.

My fees are just under US$100 a month and I will carry on unless my profits don't reach my costs, at that point I will sell up both my store and my home. I guess everyone in business will base it on whether their costs are being met and those without will adjust their land holdings to their monthly budget by tiering down a quarter.

Ack, I must have my settings to have more posts than you. Sorry!

And actually, it makes it easier to enforce. It's still there right? It didn't go away since then. Like I theorized. Only now have they been threatened about it, and had to do something. But in another case, I also wonder if there's a certain transaction limit that exempts and they moved past that? If LL honestly had no clue (or chose to ignore), then I also wonder if maybe because they felt there was no need simply because they were an American company. Wouldn't be the first major corporation to not pay taxes they didn't know they should.

On another point, this is actually making me start to wonder about VAT for me. I do ship to other European countries... I should probably get more versed in specifics on the VAT itself for the manufacturing end of it.

I know here I have to pay tax on the shipping, but our country, if you gross under $600, you don't have to claim income or sales if you choose not to.

I don't know exactly all the details on VAT, just that we have to enforce it thanks to other laws/treaties/whatever you want to call them in place.

The difference is that ATM there is no alternative. But the competition is coming. We'll tolerate this crap until there's a real rival for SL, and then everyone will leave.
SL is only worth being involved with because of its residents - its operators are incompetent buffoons who go out of their way to detract from the customer experience, and won't be worth tolerating when there's somewhere (anywhere!) else to go.

No, VAT won't kill LL - neither will whatever nonsense they come up with next month, or the month after that. They can arse it all up as much as they like until someone else offers a comparable service, but the day that service opens, SL will go into freefall.

This is a slightly different situation. It's the electronic issue with SL. The idea was to stop US ISP's offering a service and not having to collect VAT. European ISP's complained.

This then changed the supply of service from the country of origin to the country of delivery.

With physical goods, it's different, the country of supply is the country the product is made in. Don't forget that there will be import duties applied on physical goods over a certain value, something that doesn't apply to electronically supplied goods. This is why you can buy a book from abroad VAT free but can't buy a digital version of it VAT free.

Sociologists for generations to come will have a field day with the records. I predict the phrase "doing a Linden" (to indicate unbelievably suicidal incompetence in any field,) will enter the language and achieve universal understanding within a couple of years - maximum

Don't worry on that score - VAT registration isn't mandatory until your turnover reaches about £50k, so (unless you're doing a LOT of business,) it isn't an issue for you (just don't open an office over here, huh! )

umm that last bit isn't right, Ciaran. Without looking up the hefty tome of the Tariff Book, it might well be that books per se are VAT free (probably depends on whether they're educational or not).

Imagine instead you're buying a HAL 9000 from IBM in the US. On entry to the EU, it would be subject to import duty at whatever % of the value is applicable (to include insurance and freighting charges to the point of entry to the EU).. and then VAT is added on top of that *duty paid* value (i.e everything you've paid out so far). If of course you go on to sell your HAL 9000 to the European Space Agency for use in their forthcoming mission to Jupiter, you'd be entitled to offset the VAT paid at import against the VAT you collect from the ESA, remitting the balance to HMRC.

Inc