Independent musicians hit out at new VAT rules on digital downloads

From January 1, all British musicians who sell via Bandcamp must be VAT-registered

Independent musicians have attacked new VAT rules on artists who sell digital downloads via independent websites such as Bandcamp. The new legislation means that British artists will have to be register themselves as independent VAT-eligible companies.

The rules, which come into effect on Thursday (January 1), are set to hit independent musicians. Even if artists only sell one download, they have to be VAT-registered under the new rules. Major online retailers such as iTunes and Amazon won’t be affected, as they already incorporate VAT registration as part of their trading agreements.

Future Of The Left have announced they will no longer sell digital downloads via Bandcamp as they can’t afford to spend the necessary time and money registering themselves for VAT, which stands at 20% in the UK.

In a series of tweets, singer Andy Falkous said: “On an entirely selfish note, that’s my plan for surviving next year financially hugely compromised. A delight. I realise it affects other people, but I reserve the right to think about paying the rent whilst close to tears. This affects anybody who sells even one copy in the EU. In most cases, it will make digital products more expensive for EU residents, unless the business is willing or able to swallow the cost.”

Musicians – This affects anybody who sells even ONE copy of their music to the EU.

— future of the left (@shit_rock) December 29, 2014

After trying to contact tax authorities HMRC, Falkous added: “On hold with HMRC again. This is what I dreamed about when I was a kid – viva rock & roll. Any books out there that combine learning guitar and VAT returns would make a killing… The VAT helpline were relatively helpful, then the HMRC press office were as rude as humanly possible. The outcome from them was, in nearly so many words, fuck off.”

Falkous emphasised that he didn’t blame Bandcamp for the situation, stating: “Bandcamp have always been fantastic. I have faith in them. Future Of The Left downloads will still be available on cards with CD and vinyl formats, but there will be no direct downloads from us anymore. Apologies.”

Martin Carr also expressed his anger at the new rules. Referring to Elvis Costello’s 1979 New Wave single, Carr tweeted: “It’s lucky my copy of Oliver’s Army came with a free accountancy degree.”

Max Tundra said: “This legislation is a baffling mess, which appears to benefit Apple and Amazon to the detriment of Bandcamp and indies.” Artists who sell online comics are also affected by the change.

Ironically, the legislation was introduced by Chancellor of the Exchequer George Osborne to clamp down on firms such as Amazon and Apple, who had been accused of avoiding VAT by not paying tax on the countries downloads were purchased from. A document in Osborne’s budget of March 2014 stated: “The government will change the taxation rules of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From January 1 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.” It’s estimated the move will raise an extra £300 million annually in taxation.