Brexit: UK VAT changes impacting e-commerce

19 October 2020

From 1 January 2021, HMRC will introduce changes to the VAT treatment of goods sold from overseas businesses to UK consumers, either directly via import or via online marketplaces. 

The first reform will apply to both overseas and UK businesses who sell and ship goods directly to consumers in the UK, at a value less than £135. This threshold is based on the sales value of the goods only and excludes all shipping costs. 

When undertaking these types of transactions, sellers will not pay VAT at import and will instead have an obligation to charge VAT to the consumer via their website. They will then remit this VAT to HMRC via a UK VAT return. 

A further rule change means that for goods being sold by non-UK suppliers via online marketplaces, the online marketplace could be considered as the “deemed supplier”. This means the online marketplace will be responsible for charging the VAT on these types of transactions and will be the company remitting the VAT to HMRC. This will effectively take away the VAT reporting requirements for the non-UK sellers.

If you are involved in these types of sales and require further help with your VAT reporting in the UK after January 2021, then please contact us for further information here.