Preparing your business for life after Brexit?
We’ve compiled the important changes that may affect your business and answered some of your most pressing VAT questions.
Your questions – answered!
We’ve answered your most commonly asked questions and detailed what you need to know to prepare your business for the end of the transition period! If your question isn’t listed here, please fill out the form at the bottom of the page for a direct response and we’ll keep this page updated.
Any sales going to private consumers will be classed as ‘exports’ and zero-rated for VAT purposes.
What does this mean to you and your customers?
Importer of record
You will need to decide who will be the ‘importer of record’ (the importer of record is liable for the VAT owed) – you or your customer? If it is you, you will require a VAT registration in place in the country of arrival in order to account for the VAT.
If you are the importer of record, you will also require an EU EORI (Economic Operator Registration Identification Number), this identifies you as the importer to the EU customs authorities. After Brexit, you will require both a UK and EU EORI number if you importing into either. We can help you obtain both.Learn more »
In some EU countries, they require a non-EU country to use a Fiscal Representative. The Fiscal Representative is jointly liable for any VAT owed and may require bank guarantees and increased fees. Speak to us at SimplyVAT.com to find the best options for your business.Learn more »
I’m selling on a marketplace to EU consumers, should I get worried about my orders?
Getting your goods to your customers within the EU may become more difficult as delivery times lengthen due to the paperwork that comes with being outside the European Union’s Single market and Custom Union.
Marketplaces are reviewing their logistics operation in order to work within the new border controls being introduced. Amazon, for example, has recently released the following information for its third party sellers:
- FBA offers using EFN will not be fulfilled across the UK-EU border
- Pan-European FBA inventory transfers will stop between the UK and EU (however, Pan-European FBA will continue to transfer inventory within the EU region, supporting your sales on Germany, France, Italy and Spain sites)
- To mitigate the impact of these changes, you should consider splitting your inventory and sending it to a fulfilment centre in the UK and the EU, so that you have sufficient stock either side of the new customs border
- This may require you to ship your products across the new UK-EU customs border and provide additional information as part of a customs declaration
I heard that the UK tax authority is making the marketplaces account for the VAT on my sales? What does this mean for me?
HMRC issued a notice that declared marketplaces (eg. Amazon, eBay) will become liable for the VAT owed by its third party sellers. Sellers trading through online marketplaces will no longer be accountable for the VAT.
These new regulations will apply when the following is true:
Goods are owned by a seller who is based outside the UK
The goods are located in the UK at the point of sale
The sale to the UK customer is facilitated by an online marketplace
The supply is not to a (VAT registered) business.
The seller operating through the online marketplace will need to VAT register in order to zero-rate the goods.
For non-UK sellers who bring stock into the UK for onward sale to private consumers via their own website and not via an online marketplace – the rules remain unchanged whereby the seller must register and account for VAT on sales to the UK.
For any business to business transaction whereby the goods are in the UK at the point of sale, the online marketplace liability is not applicable.
Post Brexit – can I import my goods into the EU via the UK using a Bonded Warehouse?
Putting goods into customs warehouses can be done now and after Brexit, it would be the same rule.
You can place your goods in a customs warehouse as a depositor without any authorisation. The forwarding agent will prepare the necessary documents in order to put the goods in the warehouse without paying the duty or VAT. If they are re-exported the VAT and duty is also not paid.
You can process your goods inside the warehouse, but only certain type of processing is allowed what it is known as “usual forms of handling”. Handling, labelling, repackaging and bundling is allow inside the warehouse.
Does the Low Value Consignment Relief Programme still exist whereby I can bring goods under the value of £15 into the UK without worrying about VAT or duties?
The Low Value consignment relief programme will no longer exist from 1st January 2021 – HMRC are introducing the following measures on consignments with a value below £135:
- HMRC will be moving the point at which VAT is collected from the point of importation to the point of sale. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments.
- Online marketplaces such as Amazon and eBay where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT.
- For goods sent from overseas and sold directly to UK consumers (not via any online marketplace), the overseas seller will be required to register and account for the VAT to HMRC.
- HMRC is abolishing the Low Value Consignment Relief programme which stopped the need for an importer to pay import VAT on good imported into the UK with a value of £15 or less.
- HMRC have stated, however, where the business customer is VAT registered in the UK and provides its valid VAT registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge.
- The changes will not apply to consignments of goods containing excise goods or to non- commercial transactions between private individuals. Existing rules will continue to apply for these transactions.
- Please note, even though these arrangements will mean that for many consignments not exceeding £135 in value there will no longer be any VAT to collect at the border, customs declarations will still be required for non-fiscal purposes.
What’s the VAT treatment for consignments of £135 and above? What regulations will apply?
For those consignments with values of over £135, there are some other changes coming into effect from 1st January 2021. Businesses will be able to use postponed VAT accounting to account for import VAT on their VAT return for goods imported from anywhere in the world.
This means the business will be able to declare and recover import VAT on the same VAT return, rather than having to pay it upfront and recover it later, subject to normal VAT recovery rules.
What is the £135 consignment value based on?
The £135 threshold applies to the value of a consignment and not to any individual goods within that consignment.
The consignment value is based on the sale price excluding VAT.
The sales price excludes:
Transport and insurance costs, unless they are included in the price and not separately indicated on the invoice.
Any other taxes and charges identifiable by the customs authorities from any relevant documents
If the consignment value is over £135 then normal VAT and customs rules will apply ie. import VAT will be charged when the goods enter the UK.
Do I need a UK VAT Registration post Brexit?
The following businesses will have to register for UK VAT (if not already registered) and account for VAT to HMRC:
Any online marketplace that supports third party sellers through its platform, as they will have to account for the VAT on all the sales from those third party sellers.
Selling on your own website
Any seller using their own website to sell directly to UK consumers, where the goods are outside UK at the point of sale or goods importing into the UK do not exceed £135 in value.
As is the case now – any overseas based sellers who hold stock in the UK for onward sale to UK private consumers.
I am currently filing for my digital service sales to private consumers on VAT-MOSS (Mini-One-Stop-Shop) in the UK, what do I need to do?
After the end of the transition period, as a UK established business, you will need to deregister from MOSS and choose an EU country from where you would want to register on the non-Union scheme. The non-Union scheme works the same as the Union MOSS, but was designed for non-EU businesses.
Notes: Northern Irish businesses are not able to use MOSS unless also established in an EU country. Will need to use the non-union MOSS.
Yes, HMRC has confirmed that all VAT registered businesses currently required to submit monthly Intrastat arrivals declarations will still be required to do so from 1 January 2021.
Have we answered your questions?
If there is something we haven’t covered or you have any additional concerns, please fill out the form below. Your questions will be answered by our team members dedicated to all things post-Brexit. We will also be constantly updating this information to ensure you stay ahead of the game.