EU Exit – time to take action
Following the agreement of the post-Brexit trade deal, businesses should act to avoid interruption to operations and understand the opportunities presented.
There is a lot of talk in the media at the moment in relation to online sellers refusing to sell to UK non-business customers from 1 January 2021 and so we have summarised the details here.
In order to consider the impact of the new arrangements, it is useful to remind ourselves of the arrangements pre 1 January 2021. The summary below covers direct sales to non-business customers and not sales via an online marketplace.
EU sellers
For EU sellers (outside the UK) of stock located in another EU country there were the following options:
As goods moved within the single market, there were no additional checks on the goods as they arrived in the UK. The above “distance selling” rule is an EU simplification measure and no longer applies in the UK post 31 December 2020.
Non-EU sellers
If the seller was responsible for importing the goods into the UK, the seller was liable to pay any related import VAT and customs duties. A “low value consignment” relief applied for imports of a value less than £15 where no VAT and duty was payable.
In the post EU exit world, as distance selling no longer applies the following new arrangements need to be considered. As Great Britain is no longer part of the EU single market, the rules for imports into the UK will apply. Please note that Northern Ireland is still a part of the EU for goods purposes and so the original rules still apply to shipments by EU vendors with goods located outside the UK to non-business customers in Northern Ireland.
If you are already VAT registered in the UK due to previous distance selling to UK non-business customers then this UK VAT registration will still be valid and we have not had any indication from HMRC that these VAT registrations need to be amended.
In addition to the EU exit changes, HMRC have brought in new rules for imports over and under £135 at the same time which has been causing some confusion for businesses. Please note that the VAT registration threshold does not apply to non-UK based sellers so any sale can require a UK VAT registration irrespective of value.
The new arrangements will depend on the delivery terms in place but, in summary, there are the following options:
1. Direct sales – Customer imports.
2. Direct sales – Supplier imports.
3. Direct sales – via online marketplace.
Should your require any further details or require support in relation to a UK VAT registration or ongoing VAT and import obligations, please get in touch via the button below.
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