MOSS Hell... What rate to use and when?

[nickie-uk]

Hi all,

I am trying to help a friend who is rather new to the MOSS process. Note that I am not an accountant hence why I am posting here, maybe someone can help.

The moss process is mostly about electronic services which in some cases bring small margin, so since currencies are involved it is very important to get it right.

By reading MOSS pages in HMRC I understand that money collected from an EU country (including the country’s VAT rate) have to be converted to pound sterling in order to be declared in the MOSS return and then paid to HMRC MOSS account. The rate to be used for that period however is decided after the quarter ends. So for example for the period ended June 2016 the rate should be 1.2099 as per:

https://www.gov.uk/government/publicati ... -june-2016

What my friend does is to send invoices to her customers showing amounts in GBP and at the end (as a note) she puts an amount in EUR should the customer decide to pay into her EUR currency bank account (which is always preferred when someone pays in EUR). The amount she puts there is calculated using the VAT exchange rate as published in HMRC *for that month*.

The problem is however that the customer’s service (and hence the vat) is calculated based on the latter conversion and no other. If at the end of the quarter, while doing the MOSS, the rate specified by HMRC is different, then obviously things don’t tally as the VAT proportion will be higher or lower from the one the customer actually paid (in EUR).

Would it be correct to submit the MOSS using the normal VAT exchange rates when the invoices where generated or –if not- how should this be tackled?!?!

Very confused here!

Thank you