Recording sales under the VAT Mini One Stop Shop (MOSS) scheme

If you're selling digital services to consumers in the EU you may need to start using the Non-Union VAT MOSS scheme.

  • VAT Mini One Stop Shop (VAT MOSS) is a way of paying VAT on supplies of digital services (broadcasting, telecoms or other electronic services).

  • Business to consumer (B2C) digital services sold to EU customers are generally subject to VAT charged in that country.
  • From 1 January 2021, the UK will stop being part of EU-wide VAT MOSS scheme.

    To continue using MOSS, you'll need to register for a Non-Union VAT MOSS scheme in an EU member state.

  • Learn how to record (B2C) digital services sales in the EU post Brexit.

Non-Union VAT MOSS scheme

UK businesses must use Non-Union VAT MOSS (for businesses based outside the EU).

  • Only one single Non-Union VAT MOSS return needs to be filed each calendar quarter.
  • HMRC sends the relevant parts of the return and payment to the tax authority of the country where the ultimate customers are based.

Businesses must: 

  • Be based outside the EU.
  • Have no fixed or business establishments in the EU.
  • Supply digital services to customers in the EU.

What are digital services?

Digital services include, but are not restricted to:

  • Broadcasting – Services including the supply of television and radio programmes.
  • Telecommunications – Services including fixed and mobile telephony, fax and connection to the internet.
  • E-services – Services that are heavily reliant on the Internet for their execution. For example, video on demand, apps downloads, music downloads, ebooks and antivirus software.

The above list is not exhaustive. It’s important that you understand whether the services that you supply will fall within these new rules. For further guidance, please contact HMRC or Revenue.

The following are not covered by the new rules:

  • Sales to other businesses (B2B) in the EU.
  • Sales to customers located outside of the EU.

VAT rules for selling digital services

Create a VAT MOSS liability ledger account

Before you can post sales under the new VAT MOSS scheme, create a new liability ledger account to record the VAT on digital services. As you are reporting the VAT separatley to a normal VAT retrun, you'll need a differnt to record the values.

  1. From Settings and, in the Financial Settings section, choose Chart of Accounts.
  1. Select New Ledger Account and enter the following information:
Included in Chart Leave this selected.
Ledger name* Enter a name for the account, for example, VAT MOSS liability.
Display name* If you want to use a different display name you can, however, we recommend also using VAT MOSS liability.
Nominal code* You can enter any nominal code here as it’s the category that determines where it appears on your balance sheet. If you want to use a number within the default liabilities range, enter a code that’s not already in use between 2100 and 2230, for example, 2207.
Category * Choose Current Liability.
Category Group This defaults to Liability and you can’t change this.
VAT Rate Choose No VAT.
Visibility This defaults to Other Payment, Other Receipt, Journals and Reports. You must also select the Sales – Invoice / Credit, Product / Services / Customer defaults check box.

* This information is mandatory.

  1. Click Save.

Record sales under the VAT MOSS scheme

There are two way to record the sale:

  • Record a sales invoice
  • As a receipt, if you've already received payment and your customer doesn't require an invoice.

Record a sales invoice

As the Transaction should no appear on your normal VAT return, you’ll need to create 2 lines on the invoice, both with No VAT as the VAT rate. One line for the Net value of the digital services and a second line for the VAT.

  1. From Sales, then click Sales invoice, then New.
  2. Select EU Goods/Services and choose (Services Standalone) from the drop-down list.
  3. Change the VAT rate to No VAT.
  4. Enter the details and net value of the digital service.
  5. Add a second line and repeat steps 2 and 3.
  6. Enter the details of the VAT amount and select the ledger account you have just created.

The net value of the sale is recorded against the relevant sales ledger account and from the second line the VAT is recorded against the VAT MOSS liability account. As both lines a recorded as No VAT, they don't appear on your normal VAT return.

Record as a customer receipt

If your customer doesn’t require an invoice, for example, because the sale was made via your online store and you’ve already received payment, you can post the sale as two other receipt transactions. For more information, please proceed to the section ‘To record VAT MOSS sales when no invoice is needed’.

To record a sale under the VAT MOSS scheme, the customer record must have no VAT registration number entered, must be set to use the base currency, and must show the customer’s address in the relevant EU country.

  1. Go to Banking, then click the relevant bank account.
  2. Click New Entry then Sale / Receipt.
  3. Click the Other Receipt tab, then check or enter the following information:
Customer (optional) If you want to record this receipt against a particular customer, enter the name here.
Bank * Check the correct bank account appears. If you need to change this, select the correct account from the drop-down list.
Method * Select the payment method.
Date Received* Enter the date the payment was received.
Reference (optional) Enter a reference for this receipt.
Amount Received * Enter the total amount of the receipt.
Ledger Account Choose the sales ledger account you want to use for this transaction.
Details If required, enter additional information about the sale.
VAT Rate * Choose No VAT.
VAT This shows zero.
Total This shows the VAT amount.

* These details are compulsory.

  1. On the next line enter the following information:
Ledger Account Choose the new VAT MOSS liability ledger account you created earlier.
Details If required, enter additional information about the sale.
VAT Rate * Choose No VAT.
Total Enter the VAT amount of the receipt.
The total of all entries must match the value entered in Amount Received before you can save it. If you enter multiple lines, the transaction still appears on the bank activity as one receipt but as individual transactions on the relevant ledger accounts.
  1. Click Save.

Record VAT MOSS sales when no invoice is needed

If your customer doesn’t require an invoice, you can post the sale as two other receipt transactions. One transaction to post the net value of the sale to the relevant sales ledger account and a second transaction to post the VAT amount to the VAT MOSS liability account. To ensure they don’t appear on your normal VAT Return, both transactions are posted as No VAT.

To post the net value of your sale

  1. Go to Banking, then click the relevant bank account.
  2. Click New Entry then Sale / Receipt.
  3. Click the Other Receipt tab, then check or enter the following information:
Customer (optional) If you want to record this receipt against a particular customer, enter the name here.
Bank * Check the correct bank account appears. If you need to change this, select the correct account from the drop-down list.
Method * Select the payment method.
Date Received* Enter the date the payment was received.
Reference (optional) Enter a reference for this receipt.
Amount Received * Enter the total amount of the receipt.
Ledger Account Choose the sales ledger account you want to use for this transaction.
Details If required, enter additional information about the sale.
VAT Rate * Choose No VAT.
VAT This shows zero.
Total This shows the VAT amount.

* These details are compulsory.

  1. On the next line enter the following information:
Ledger Account Choose the new VAT MOSS liability ledger account you created earlier.
Details If required, enter additional information about the sale.
VAT Rate * Choose No VAT.
Total Enter the VAT amount of the receipt.
The total of all entries must match the value entered in Amount Received before you can save it. If you enter multiple lines, the transaction still appears on the bank activity as one receipt but as individual transactions on the relevant ledger accounts.
  1. Click Save.

View the transactions you need to include on your VAT MOSS Return

To see the transactions you need to include on your VAT MOSS Return, you can run the Nominal Activity Report for the VAT MOSS liability ledger account.

  1. Go to Reporting then click More.
  2. In the Detailed Reports section, click Nominal Activity.
  3. In the Period list, click Custom. Then enter the date range for the relevant VAT quarter in the From and To fields.
  4. Choose the VAT MOSS liability account.
You can locate the Liability Ledger account by entering its number in the Nominal Activity Report search box.
  1. To view details of a transaction, click the relevant line. To return to the report, click the back button on your browser menu bar.
  2. To save or print the report click Export Summary or Export Detailed. If all accounts are selected you may need to click Yes to confirm. You should now choose one of the following file formats:
  • CSV – Depending on your internet browser, the file automatically downloads to your Downloads folder or you’re prompted to save the file. Browse to where you want to save the file and Save.
  • PDF – The PDF opens in a new window or tab. Open your browser File menu then choose to print or save the report.

Pay VAT due under the MOSS scheme

When you pay your VAT MOSS bill to HMRC or Revenue, you must record an Other payment transaction against the VAT MOSS liability ledger account. This shows the payment against your bank account and reduces the VAT MOSS liability amount on your balance sheet.

  1. Go to Banking and click the required bank account.
  2. Click New Entry then Purchase / Payment.
  3. Click the Other Payment tab, then check or enter the following information:
Supplier (optional) Don’t enter anything in here.
Paid from Bank Account * Check that the correct bank account appears. If you need to change this, choose the relevant account.
Method * Enter the payment method.
Date Paid * Enter the date of the payment.
Reference (optional) Enter a reference for this payment.
Amount Paid * Enter the total amount of the payment.
Ledger Account Choose the VAT MOSS liability account.
Details If required you can enter more details about the payment.
VAT Rate Choose No VAT.
Total This defaults to the value you entered in Total Payment.

* These details are compulsory.

  1. Click Save.