BUSINESS advisers Ernst & Young are warning dotcom companies that they could be facing a large online VAT liability.
The firm's new guide "The VATman cometh for dotcoms" highlights the key pitfalls of the indirect tax system, including some of the more bureaucratic demands of the tax authorities in the EU, and urges companies to make sure they have considered all the implications before they go online.
Robert Crooks, head of indirect tax at Ernst & Young in the North, said: "It is vital for dotcoms, or indeed any company venturing into e-commerce, to have a full understanding of the impact that VAT will have on their business.
"Unfortunately VAT rules are decades behind the modern connected economy, consequently imposing an enormous compliance burden on businesses. They are not designed to take account of the Internet, WAP technology or digital TV."
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