UK is a joke on tax for electronic goods. We distribute licenses via email. This means we have to pay VAT on ALL our sales (around 14-20% depending on a few things).
The VAT stuff seems to be written for a country in the 90's though. If we sent them a CD by post we don't need to pay VAT on sales outside the EU. If our software costs $100, we save $20 in tax if we post it, so ~+$15 gain to us if it costs $5 to send.
It seems a little grey as to if a letter posted with a 'license certificate' would count as physical goods, from what I am reading though it should be OK.
So, it's all a big joke. It would take only a few minutes to post a letter to each customer, and saves us ~£10 each time (90% of our sales originate from outside the EU). So economiclly makes sense. However the downsides are:
- Wastes our time
- Wastes our money
- Possibly reduced conversion rates if people have to enter their addresses (I consider this solvable though as a lot of transactions carry address I think and there's other ways this can be solved un-obtrusively)
- Customers don't want a stupid ****ing CD or certificate or whatever we're forced to send them
It's unclear (and they conveniently ignored this question) as to if I can send the customer 'a backup license file by email'.
And this is all confirmed after phone calls and letters written to HMRC!
Fortunately and coincidentally my local MP is Vince Cable, his surgery is across the road from our offices as well so I've booked in a clinic to talk to him about this. UK government claims they support startups, it's stating to now look VERY cost effective to move our operations to USA!
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