VAT: overseas goods

HMRC has published a policy paper Changes to VAT treatment of overseas goods sold to customers from 1 January 2021 on a ‘new model’ for the VAT treatment of goods arriving into Great Britain from outside the UK after the end of the Brexit transition period (the paper does not cover the Northern Ireland protocol).

For imports of goods not exceeding £135 in value (aligning with the customs duty liability threshold), the point at which VAT is collected will move from the point of importation to the point of sale, meaning that UK supply VAT, rather than import VAT, will be due on such consignments.

Low value consignment relief will be abolished. Where online marketplaces are involved in facilitating sales, they will be responsible for collecting and accounting for the VAT. For B2C sales of goods direct to consumers in the UK, the overseas seller will be required to register and account for VAT.

The paper notes that, although the new model will remove the necessity to collect VAT at the border for consignments under £135, customs declarations will still be required for non-tax purposes although a number of ‘facilitations’ will apply.