New rules have been introduced which apply to businesses making distance sales of goods to the UK following Brexit. These new rules apply to all packages worth GBP 135 or less (the current GBP 15 VAT and duty exemption will also cease to apply) where the seller is not currently VAT registered and makes UK supplies in any 12-month period of under the UK GBP 70,000 distance sales VAT registration requirement.
The new rules will apply immediately following Brexit and registrations should be put in place as soon as possible in anticipation of this.
If you are based outside the UK and sell parcels to UK buyers worth £135 or less, you must pay import VAT. Parcels include letters, packages, packets and any other article that could be sent by post, even if they are sent by different methods.
To pay import VAT you can either:
- register with HM Revenue and Customs (HMRC) to report and pay the import VAT due yourself
- pay a parcel operator that offers a service to pay import VAT to HMRC on your behalf
Who should register?
You can register to pay import VAT if you:
- are based outside the UK - this includes the EU, outside of the EU and the Channel Islands
- intend to sell goods worth £135 or less (not including shipping, insurance and incidental costs) to UK buyers after Brexit
- choose to pay the import VAT yourself and not to a parcel operator
You can register with HMRC before you need to start paying import VAT on parcels.
HMRC may refuse to register you if they have evidence that you have not met registration rules.
Do not register if any of the following apply:
- all goods you sell to UK buyers are worth more than £135 (not including shipping, insurance and incidental costs) – You will need a UK VAT registration.
- if you have to pay Excise Duty on all the goods you sell (for example, alcohol and tobacco) – You will need a UK VAT registration.
- your business is based in the UK or is considered to have a ‘UK footprint’ - for example, if you employ or sub-contract people in the UK to sell all your goods worth £135 or less to UK buyers – You will need a UK VAT registration.
- you are sending a gift
- you pay a parcel operator that offers a service to pay import VAT to HMRC on your behalf
- the goods are sent to the UK under customs special procedures (for example, temporary admission and transit procedures)
You must keep records as evidence of any agreement you have with a parcel operator to pay import VAT on your behalf for 6 years from the date the parcels are posted.
If you are based in the Channel Islands and choose to pay import VAT to your parcel operator, you can either:
pay the import VAT to your national parcel operator - Jersey Post and Guernsey Post have agreements with HMRC to pay the import VAT on your behalf
pay the import VAT to a parcel operator with an agreement in place that their carrier will pay HMRC
Failure to register
If you do not register with HMRC or pay import VAT to a parcel operator, you may find:
- your parcels are delayed or stopped from entering the UK
- the UK buyer may have to pay additional tax and fees
- you have to pay a penalty of £1,000 per importation
You must still register if you sell zero-rated goods. Zero rated goods are still VAT-taxable but the rate of VAT charged is 0%.
4 Eyes Ltd can undertake the registration process on your behalf and provide assistance in completing quarterly returns. If your turnover exceeds the VAT registration threshold, we can then VAT register you within the UK and act as your VAT agent.