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.