E-commerce Trade and VAT

Consignments with value below £135

For consignments not exceeding £135 in value, VAT to be collected at the point of sale and not at import stage. 

Where online marketplaces are involved in facilitating the sale, they will be responsible for collecting the VAT, accounting for the VAT and reporting the VAT whether this is to the UK or EU.

Sales of goods by overseas sellers, where the goods are already in the UK at the point of sale, responsibility for accounting for VAT will be moved from the overseas seller to the online marketplaces that facilitates the sale.

Goods sent from overseas and sold directly to UK consumers without online marketplace involvement, seller will be required to register and account for the VAT to HMRC. Overseas sellers will remain responsible for accounting for the VAT on goods already in the UK and sold directly to UK consumers without online marketplaces involvement.

Where UK business sells to EU consumer, there is no longer distance selling rules or thresholds. UK business must register for EU VAT in one member country and also register for IOSS. If an online marketplace is used, they are responsible for charging, collecting, declaring and paying the VAT for consignments with a value of or below €150 (£135). 

Consignments with value over £135

Consignments with value of over £135 is treated separately and seller must account, report, declare and pay for VAT themselves. VAT charged and paid at the point of entry (customs) to the UK on all imports.   

This means sales to consumers will have VAT & duty charged, which must be paid by the buyer or seller. Cargo or transport company can assist in this situation.

Business to Business (B2B) - if the customer is a business that is VAT registered and opted to use postponed VAT accounting then they will not pay VAT at the customs from UK perspective.

There are various discussions around flat rate VAT scheme however this might not be the correct course of action as it may lead to more VAT being paid therefore lower profit margins.

Please get in touch with us for further information.