12 Nov 2021 10:57 AM

For imports of goods from outside the UK in consignments not exceeding £135 in value, which also aligns with the threshold for customs duty liability, HMRC has changed the point at which VAT is collected from the point of importation to the point of sale.

This means that UK supply VAT, rather than import VAT, will be due on these consignments.

Where online marketplaces (OMPs), are involved in facilitating the sale, they will be responsible for collecting and accounting for the VAT.

Consignments of goods with a value of £135 or less that are outside the UK and EU and sold directly to customers (not through an online marketplace or otherwise via e-commerce) in Northern Ireland will have import VAT charged. Similar rules apply now in the EU for goods below €150, such that supply VAT would instead apply where these are sold by e-commerce.

The £135 limit applies to the value of a total consignment that is imported, not the separate value of individual items that are in a consignment.

Goods sent from overseas and sold directly to UK consumers without online marketplaces (OMP) involvement, the overseas seller will be required to register and account for the VAT to HMRC.

The seller must charge and account for VAT at the point of sale, unless the consignment is a business to business sale and the customer has given them their UK VAT registration number.

To charge and account for VAT the seller will need to:

  • know the precise nature of the goods to find out the correct rate of VAT to charge
  • register for VAT– sellers that are already registered for VAT do not need to re-register
  • keep records of the goods sold, and make sure they get accurate information to apply the correct VAT treatment to them

 To make it clearer for B2C, we have set out the different scenarios:

 

  • Sale to customer <£135

Supply VAT charged on invoice to customer.

No import VAT payable at border.

Declare on VAT return in UK.

 

  • Sale to customer >£135, overseas seller is importer of record and owner of goods at import

Import VAT payable and reclaimable by overseas seller under PVA (for UK VAT and UK EORI required.)

Supply made once inside UK, therefore supply VAT payable by customer.

 

  • Sale to customer >£135, overseas seller is importer of record but not owner of goods at import

Customer charged inclusive amount to cover VAT cost.

Import VAT payable by overseas seller is payable at border or through PVA.

Import VAT cannot be reclaimed by overseas seller.

 

  • Sale to customer >£135, customer importer of record

Customer charged no VAT by overseas seller.

Import VAT payable at border by customer.

DHL (or similar) will collect payment from customer before releasing goods.

Our specialist team of advisors are helping businesses navigate the changes to VAT rules post Brexit. If you have any questions please contact us for assistance.