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HMRC’s New VAT Treatment of Overseas Goods Sold to UK Customers

HMRC’s New VAT Treatment of Overseas Goods Sold to UK Customers

July 2020 saw HMRC’s release of its new VAT treatment of overseas goods arriving into Great Britain. This new model is required because the UK will be exiting its transition period come 1 January 2021 and this model will ensure that goods from both the EU and non EU countries are treated in the same way and ensures UK businesses are competing fairly with VAT free imports. 

What to know about Importing Goods into the UK

When importing consignments (goods) not exceeding in value of £135 into the UK, VAT will be collected based on the point of sale instead of the point of importation. This means that UK supply VAT, rather than import VAT, will be due on these consignments.

According to HMRC’s website, the new arrangements will also involve the abolition of Low-Value Consignment Relief, which relieves import VAT on consignments of goods valued at £15 or less

The new arrangements mean that import VAT will no longer be collected on consignments not exceeding £135, except for the following types of consignment, which are outside the scope of the new arrangements:

  • non-commercial consignments, such as gifts (gift relief for consignments valued up to £39 will remain)
  • consignments containing any goods that are subject to an excise duty
  • consignments from Jersey and Guernsey that are covered by the Import VAT Accounting Scheme

Selling goods in the UK through an online marketplace? Here’s what you need to know. 

If you’re selling through an online market place (like eBay or Amazon) and the online marketplace facilitates the sale, the Online marketplace (OMP) will be responsible for collecting and accounting for the VAT. 

However, if you’re selling overseas goods directly to UK customers without the facilitation of an OMP, you will be required to register and account for the VAT. vatglobal is able to offer assistance with both registration and VAT filing. 

So who is liable to register for UK VAT? 

HMRC’s New VAT Treatment of Overseas Goods Sold to UK Customers means that the following types of businesses will have to register for UK VAT (if not already registered) and account for VAT to HMRC:

  • any business that operates an OMP that facilitates sales of goods to UK customers
  • any business that sells goods directly (without OMP involvement) to UK customers where the goods are (a) outside UK at the point of sale (b) imported to the UK in consignments not exceeding £135 in value

Businesses established outside the UK and selling goods to UK customers where the goods are already in the UK at the point of sale are liable for UK VAT on those sales under existing rules. Such businesses should already be VAT registered. 

To read more about HMRC’s new VAT treatment of overseas goods, read here.

Vatglobal is able to assist both OMPs and foreign sellers in their VAT registration and filing administration. For any questions, please email info@vatglobal.com. 

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