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Express Update - Ecommerce Goods into UK

Dear Customer

As you may be aware, the UK left the EU on 1 January 2021, due to which there are some changes to the VAT application and mechanism for settlement of VAT on goods imported into the UK and Northern Ireland. 

As your business partner, we have noted the main impact of BREXIT on you as an Importer of Goods into the UK and Northern Ireland below with some helpful links to the relevant websites for your perusal.  Please review and act at the soonest to ensure you are in full compliance with UK Laws and Regulations.

Note that there may be additional guidance and changes to the law and process which you may wish to stay informed on and act accordingly.

New VAT Rules for Import of Low-Value goods to the value of GBP 135 and below effective from 1 January 2021.

This guide clarifies four key points:

1) The scheme covers most overseas consignments with an ‘intrinsic’ value of under £135 which is defined as the price the goods were sold for, not including:

  • Any transport or insurance costs, unless they are included in the price and not separately shown on the invoice
  • Any other identifiable taxes and charges
Unless sent individually, the seller must add the individual values of all items in a consignment together to get the total value of the consignment.

2) For Business to consumer sales - the seller must charge and account for VAT at the point of sale.  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
3) For Business to business sales to GB VAT-registered customers.

The seller will not need to charge and account for VAT if the customer gives them their VAT registration number, and they confirm it’s correct using the new online service that will be available from December 2020. 

4) In Northern Ireland – import VAT will still apply to goods under £135

The Northern Ireland Protocol means that Northern Ireland maintains alignment on some administrative processes within the EU VAT rules for goods, including on goods moving to, from and within Northern Ireland. However, Northern Ireland remains part of the UK’s VAT system, and the rules will continue to be largely aligned. Postponed VAT accounting will be available for businesses in NI. 

Links to the technical guidance for ease of reference is noted below: 

https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

https://www.gov.uk/guidance/vat-what-to-do-if-youre-an-overseas-business-selling-goods-in-the-uk

  • This latest Guidance below does not however, offer any help or guidance to overseas sellers in terms of registering for UK VAT. That said you can tell overseas sellers that:
  • Overseas sellers will now be liable for UK VAT on their sales (including B2B and B2C sales) and must register for VAT with HM Revenue & Customs as soon as possible in order to be VAT registered before 1 January 2021. 
  • First step is to create a Government Gateway account, which is required to enable you register for UK VAT & complete your VAT returns with HMRC   
https://www.gov.uk/log-in-register-hmrc-online-services 

  • If you are an overseas seller that only sells under £135 goods to VAT registered UK businesses (who supply their VAT registration number for the invoice) then you do not need to register for UK VAT.  If you sell any under £135 goods direct to UK consumers – you do still need to register.
  • If you are an overseas seller, selling goods to UK customers through an online marketplace, you do not need to register for VAT.
LATEST HMRC GUIDANCE ON LOW VALUE GOODS AND VAT TREATMENT IN NORTHERN IRELAND

Online marketplace guidance

https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-great-britain-using-online-marketplaces-from-1-january-2021

Direct seller guidance

https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-great-britain-from-1-january-2021

New guidance on the application of VAT in relation to Northern Ireland following the end of the transition period (links below) :-

Landing page with wider Northern Ireland guidance

https://www.gov.uk/government/publications/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021

Guidance for imports into Northern Ireland from outside the EU https://www.gov.uk/government/publications/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021/accounting-for-vat-when-importing-or-moving-goods-into-northern-ireland-from-outside-the-eu

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