Hannah Kate

poet, short story writer and editor based in Manchester

Hannah’s Bananas – a #VATMOSS analogy

Over the past couple of days, I’ve had to explain the new EU VAT regulations to a couple of people who know nothing about how e-commerce (or indeed, the internet) works. I had to find a ‘real world’ analogy to help them understand the concerns of microbusinesses and sole traders, so I thought I’d post it here in case it’s helpful to anyone else. Feel free to use it. (Or send it to Vince Cable!)


I grow bananas and sell them on a stall outside my house. I follow all the rules for banana-sellers, and happily sell to any of my neighbours who comes along. I don’t make much money, but it’s a little bit of income that I’ve worked for myself.

One day, I find out that a new law has been passed that says I need to find out which streets my customers live on. If I sell to a neighbour from Green Street, I have to go and pay a small tax to that street. If I sell to a customer from Red Street, I have to go and pay a different tax to them. If I sell to anyone from my own street, the rules are different. A nice man called Mr Moss offers to help me find the right people to pay on each street, but it will be up to me to make sure all the payments are made correctly. The people on Green Street have some complicated rules that I’ll need to follow, by the way, but Mr Moss doesn’t know all the details as yet.

Not only do I have to find out which street each of my customers lives on, I also have to take their fingerprints when they buy a banana. And I need to store those fingerprints in a secure underground vault for 10 years. I ask Mr Moss how I’m supposed to get customers to agree to have their fingerprints taken, but he seems confused that I’m not doing this already. He also doesn’t know what I’m supposed to do if someone hides their fingerprints or lies about what street they live on.

I have considered only selling bananas to people on my street, even though this might lose me some customers, but apparently there’s another law that says I’m not allowed to discriminate on the basis of what street someone lives on.

I do have another option though. If I want to avoid doing any of this, I can sell my bananas at the Banana Superstore. They will take all responsibility for taking customers’ fingerprints and finding out what street they live on. However, they will take 65% of the money for themselves, and there’s no guarantee that they will actually stock my bananas in the first place. There’s always a chance that they might demand that I become one of their Banana Direct suppliers – meaning that I’m never allowed to sell my bananas at another superstore. Or they might let people have my bananas for free, as part of their Banana Unlimited programme, and only pay me a very, very small price for this.

I only have three weeks to decide which of these options I want to take. No one told me about the law in advance, because they didn’t think to tell anyone with a banana stall about it. They only informed the Banana Superstore, who are already prepared for the changes.

Now my banana stall’s future looks bleak, and I can’t seem to get any answers from Mr Moss. Apparently, an apple stall from Green Street has been told the new laws don’t apply to them, and the man who sells strawberries on Red Street hasn’t heard anything at all. I think the cherry-seller on Blue Street has just buried her head in the sand and pretended this has nothing to do with her. I’m currently being bombarded by people offering to take people’s fingerprints for me (for a price), and the powers-that-be just won’t accept that banana stalls like mine actually exist.

Is there any future for my little stall?

If you are a sole trader or small business affected by the changes to EU VAT regulations, take action now. Learn how the changes will impact your business, join in the discussions with other small businesses, write to you MP and MEPs, sign the EU-wide petition to Pierre Moscovici. For more information, click here.  



  1. Loved the analogy. Will be referring future VATMOSS enquiries here 🙂


    It’s been so difficult trying to explain to younger/confused/freaked out people what this is all about but this makes it way easier to digest!!

  3. Excellent analogy. It shows, beautifully, just how ridiculous this situation really is. Thank you.

  4. This is the best and simplest description I’ve come across so far. Such a lovely analogy. Such a pity it’s necessary.

  5. Genius!

    you. not them. obviously.

  6. Ahhhh … Got it!

  7. I love you! Your analogy post is being widely circulated on Facebook and Twitter; it’s perfect 😀

  8. Brilliant. Thought it was bananas. Now I know.

  9. Thank you for sharing this – have never read an explanation that brings all the points together better than this. Recommend small businesses join Facebook groups/campaigns and fight for a minimum threshold.

    • I agree. A minimum threshold could definitely be a way forward. I think there are other options, but as you say, joining FB groups/campaigns can be a great place to discuss these. Thanks for your comment! 🙂

  10. This is quite brilliant. Thank you!

  11. Hi Hannah,

    This banana analogy is brilliant, haha. One thing worth pointing out though: your perception of selling through a “superstore” isn’t entirely accurate.

    Our eCommerce platform, Paddle.com, provides you with: a checkout you can use to sell on your own website; an analytics dashboard; free file hosting + delivery; we’ll handle order-related customer support; and best of all, we even handle VAT for you too. All of this costs just 5% + $0.50 per sale.

    In short, for VAT purposes, we’re the ‘merchant of record’ and that removes you from the VAT scope entirely. You can just focus on creating new products and generating sales!

    We don’t have a superstore as such, but we’d love to give you the tools to sell in *your own* awesome store 🙂

    Let me know what you think Hannah!

    • Thanks for your comment.

      We already have an online store, which we’ve built up through investing time, effort and money. Now we suddenly have to scrap that, pay more money, spend more time and effort building a new storefront, and give someone else 55% of our takings! How is this fair?

      I appreciate you are just trying to make a living like the rest of us, but right now I want to concentrate on how to ensure my existing online business survives – not start again!

  12. What a brilliant analogy. So clever and now even I explain it much more clearly.

  13. I assume, also that your stall outside your house is unattended and customers come to your stall and buy bananas and leave their money in a secure box by the fence. You don’t actually have to be there and customers get your bananas precisely when they need them.

    However, you can also avoid Mr Moss’ additional payment by reverting to standing at your stall and handing the bananas to your customers when they ask for them. They’ll have to wait for you to be awake and standing at your stall (which means you won’t be able to concentrate on growing more bananas), but hey, what’s the inconvenience to them matter?

    And, if you only teach people about bananas rather than selling actual bananas, using video and photographs, you also have to pay nothing additional.

    It’s a very strange system.

    Great explanation. Thank you.

    • Just to break the analogy for a second… I am getting really baffled by how ‘place of supply’ is determined. If I upload something to an email, the ‘place of supply’ is where it’s uploaded… but if I upload something to a server, the ‘place of supply’ is where it’s downloaded.

      Do you ever get the feeling they’re just making it up as they go along?

  14. Love it. Nails it in a beautifully succinct, understandable, and hilarious fashion. Thanks!

  15. I’ve been the cherry seller on blue street burying my head 🙁 I will share this post.

  16. Thanks for the defuddlement, Hannah. I’m still wondering whether to even try selling anything online.

  17. Awesome post – shared everywhere. 🙂

  18. Brilliant. At last I understand it! Thank you.

  19. Don’t forget, VATMOSS only applies to those sites who deliver books through automatic downloads anyway. If you email to your customers, NONE of the above provisions apply.

    (Source: HMRC Guidance notes)

  20. Shall we do a Spanish translation?

  21. And what does Mr Moss have to say about customers from Orange Street who aren’t allowed to buy bananas so take a detour and pretend to come from Green Street?

  22. Absolutely brilliant! I’ll definitely be sharing this Hannah, thank you.

  23. This is brilliant! Sharing right now 😀

  24. I was directed here from Ravelry.com and just have to say: THANK YOU! This is the best thing I’ve read in the whole mess so far.

  25. This is brilliant. Thanks for taking the time to write it.

    Are people also aware that this law will be rolled out to physical sales on 1 Jan 2016? So only one more year of selling online for those not selling digital products without being similarly burdened.

    • The physical goods thing is going to be complicated, as there are already some distance selling thresholds in place that would stop the smallest businesses would be exempt. If those thresholds remain, of course! I guess we’ll all find out 2 minutes before the new law comes in (that’s how it works, right?)

  26. Absolutely fantastic … you should be the one to write future HMRC Guidance Notes!!

  27. If my childrenswear is exempt from VAT in the UK does that mean it is exempt elsewhere? From the cherry seller on Blue Street

    • No. Not once the rules extend to physical sales, next year. That’s one of the main things we’re campaigning about. Even if you only sell one bobble hat in Europe, you will have to pay VAT to the country you sold it to. (and keep all the records of the customer for 10 years.)

    • Hi Rachel,

      No and yes. No – childrenswear isn’t VAT exempt across the EU. However, presumably you’re selling physical stuff, so you aren’t affected by these changes. Only digital services are affected at the moment.

  28. Hahaha, love the analogy. This VAT Mess is such a farce! Here I am, the Mango seller in Purple street (the one in South Africa) and I’ve opened a support group on FB for my customers that want to know more about mangoes, because apparently this is another loop hole to avoid this VAT crud.

  29. Perfect ! The banana seller makes more sense than the EU official site !

  30. Loved it Louise, Thank you and no I haven’t checked fast spring yet, I’ve delayed getting my programme out there and wondering if turning it into a physical product, pain as that will be, might work better for now.

  31. Do the rules only apply to uk sellers selling to othe EU countries? Most of my online sales are to the UK, US,
    Canada and Australia so perhaps won’t hit me too hard if so next year.

  32. solution equals Vote UKIP

    • As far as I’m aware, UKIP haven’t offered any support or assistance to small businesses affected by the changes in the law. So far, only the Greens have spoken up.

    • Pulling out of the EU won’t solve the problem. Traders in the UK, just like traders in the US and the rest of the world, will be expected remit VAT to individual European countries. Indeed, if this catches on it could get worse as all 50 US states insist of the addition of local purchase taxes, and then the remaining 160 or so countries follow suit. It will become impossible to trade anywhere without breaking some law.

      At least if the UK is in the EU then you can lobby your MEPs; make them earn their money and sort this mess out. If we’re out of Europe then we have no influence at all. Ideally, we need this system to fly apart so quickly that every other country is in doubt about how unworkable it is. But, we have to be in Europe to do that.

  33. Thanks for that. I’ll sit down tomorrow and translate it into German. -At present we only had to close a small part of our business. If it applies to physical goods from 1.1.16 we will lose 25% of our income. -The other serious issue is that we have to add VAT and our products become too expensive to be competitive. -Also, accounting for VAT is real difficult, been there done that, made mistakes 🙁 -And lastly, we now have to hold (and supply) very vulnerable information. What happens if a bulgar (hacker) breaks into our house (computer) and steals all these fingerprints and with that steals all these people’s identities?

  34. Hi, I just tried to post a reply. I was told, I’m a spammer 🙁 I’m not. Please read my post and publish it. Thanks, Lele

  35. Fabulous post! You’ve explained how micro-businesses will suffer in a way that everyone can understand.

  36. Have just posted this wonderful link on to BBC Radio 4’s consumer programme You & Yours together with the latest link from EU VAT action team – please sign everyone!


    If you have time write to your MP/ MEP- it can’t hurt and also, please write to You & Yours too or Moneybox or any other Consumer Journal /media you can think of.

  37. Brilliant analogy. This is probably a dumb question, but how does Mr Moss intend to control the pineapple sellers from across the river, where clearly he doesn’t have any jurisdiction? Will he control every penny spent on-line by the people of Green Street and the sorroundings?

  38. Well it gets worse, as they can (and will apparently) enforce this to online sales since 2003.

    I was thinking that if I simply charge for online advice /coaching and GIFT my downloads, then there’s no VAT…

    and if it’s sent as an email attachment opposed to a download link, then perhaps there’s nothing to track anyway…

    And if I add a T&C page that clearly states that the buyer will assume responsibility for any VAT liability, and state under the buy button, that by clicking the buy button, the purchaser is assumed to have read and agreed with my T&Cs…

    Only a government employee (who gets paid a salary regardless of how much inconvenience caused or small businesses closed as a result) could sanction such a stupidly crass and unsustainable idea!

    I love the idea that it’s all bananas…

    Thanks for writing such a cleverly worded ‘Must share’.

  39. This seems to be the only way you can describe the problem to one of the EU politicians. Cause their answer is always: But we gave you Mr. Moss, what is your problem?

  40. Oh, my heart goes out to the poor manure seller on Purple St…..sounds like heaped bags of s… to me…..
    But, you did explain it so well that he will probably be able to understand his so called obligation to the Government….perhaps he will pay the VAT in 100 litre bags of beautiful manure!!!!!
    What next I ask!!!!

  41. This is the best analogy ever! Thank you for posting this!

  42. Nice article, but with one failure. You write: “Apparently, an apple stall from Green Street has been told the new laws don’t apply to them”. That is not true.

    These EU VAT rules are the same for everybody in the EU. So, if you say that these rules don’t apply to other EU countries (other streets in your analogy), then that is simply not true.

    I simply cannot understand why people have a problem with the ten year rule. It has always been like that in the Netherlands.

    • The rules do not apply to people outside the EU. For me, I have had to stop trading with the rest of the EU. There is no affordable software that calculates VAT based on country of purchase, I also use a dozen “Buy Now ” buttons, but I have to replace each one with dozen others, based on country of purchase, and Paypal can’t legally divulge the proof of residency I need. More of a rant on my website.

      • It may not apply to you just yet, but if it works in the EU, then my bet is that each US state will insist on having its own rate of purchase tax applied on each sale in the US.

    • Thanks for your comment. To clarify, I wasn’t suggesting that the rules don’t apply in the other ‘streets’, but that the rules may have been interpreted differently there. There’s plenty of evidence emerging to show that entrepreneurs in different member states have been given different advice (or, in some cases, no advice at all). Have a look at the UK revenue service (HMRC) guidelines and you may well find that they differ (in some small details) from the guidelines you’ve been given in the Netherlands. I’ve read as many of the EU websites as I can (though not every state has a web resource, and I can only read the ones with English or French translations available), and I can promise you that they are NOT the same.

      As for the 10 year rule – I appreciate that this is no big change for entrepreneurs in some member states. But it is for some.

  43. At the moment, I’m selling cherries and burying my head. The entire fiasco makes my eyes swivel in their sockets.

  44. Great analogy. I’m an accountant and I’ve been struggling with this, so how Joe and Jemima Public cope with it, I’ve no idea.

    Not sure about this bit though “I have considered only selling bananas to people on my street, even though this might lose me some customers, but apparently there’s another law that says I’m not allowed to discriminate on the basis of what street someone lives on.” As far as I’m aware a business can decide to sell its goods in as many or as few markets as it wishes? I’m sure you can set up a website so it only sells to UK and non-EU based customers?

    One other thing comes to mind – as a holder of digital info on your customers, you would have to register as a data holder with the Information Commission, which carries a small fee (surprise, surprise)…

    • Thanks for your comment. I’m also not sure about the rules on restricting sales – which is why I was suitably vague in the post! There is an EU directive that states companies cannot discriminate against customers on the grounds of their state of residence. However, I know that UK sales count as domestic sales. I assume that means I can sell ‘domestic and non-EU’ without contravening the other directive, but I can’t pick and choose which EU states I do business with (e.g. I can’t sell to Sweden if I don’t also sell to Hungary).

      But I’m not willing to put money on my interpretation of the laws being correct!

  45. Maybe I am simple, but I can honestly say this is the best analogy for the VAT mess nonsense! Thank you and even though it isn’t comical, I did get a big kick out of this blog post, so thank you!

  46. I like the bits about “Mr Moss seems to be surprised that I do not already do this” and “the powers-that-be refuse to accept that banana stands like mine actually exist”. Because that’s pretty much how government regulators seem to work; they assume that every business is a gigantic corporate enterprise with dozens of people assigned to every possible activity, and so “retain records for ten years” is just a small increase in overall workload.

  47. I think you forgot to mention that even if you let Mr Moss help you, if you (or he) make any mistakes in your money for Green Street, then the infamous Green Street Heavies will come round to your stall and beat you and your bananas into a pulp. If you make a mistake in your money for Blue Street then Mr Blue himself will come round and split your bananas like they’ve never been split before. The consequence of an error in the money for Red Street are too bad to contemplate in detail, but they do involved being covered in eggs, milk and flour and then given a battering.

    Mr Moss is a very reasonable and helpful guy, but he’s unable to protect you from each street’s legal system if you get it wrong.

    • I think Mr Moss is supposed to protect us from the Green Street Heavies – they have to go through him first. Poor old Mr Moss!

  48. Love the explanation. So, I sell printed Ts. If I sell online from 1.1.16 and I sell 1 to a customer in, say, Germany, 1 to a customer in Latvia and 1 to a customer in Spain for the whole of that year, then I have to obtain 3 pieces of independent evidence to say that each customer lives in whichever country and then pay VAT at the appropriate rate to the tax authority in those countries. Is that correct? Absolute madness. If the average sales price of a T is £10, we are talking about a major investment of time and effort for very little input into any one country’s tax system. Whose bright idea was this?

    • At the moment, the new rules only apply to downloads (‘digital services’), so t-shirts wouldn’t be affected. However, there are plans to expand this to physical goods from 2016, so it won’t be long before all items sold on the internet would need to be taxed this way. I agree, it’s absolute madness.

  49. The thing that irks me is that there is nothing in it for me. When I collect in my local country I get a commission which is basically a small discount on the taxes I have collected. The EU gives me NOTHING for collecting their VAT and expects me to jump through all these idiotic hoops.

  50. Very well said my friend, the small businesses have to suffer even more from this madness.

  51. My parents and I have been discussing this mess at the dinner table for days now and your analogy makes it very clear just how bad this situation is. Thankyou.

    • Thanks! I’m glad the analogy helps people explain/understand the situation. I wrote the piece in December and was really hoping that it would have been retired to my blog history by now – it’s really frustrating that it’s still relevant!

  52. This is brilliant! Thanks for the article, it might help me get a few people’s heads out of the sand.

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