Important information for non-UK businesses selling to UK-based customers

Last updated: 14 November 2019

Britain is currently scheduled to leave the European Union no later than 31 January 2020, although it may leave sooner than this if a withdrawal deal is ratified.  If the UK leaves with a deal, transitional arrangements will mean that EU Customs and Single Market rules will apply until at least end December 2020 and perhaps beyond.

However, unless a withdrawal agreement is approved or Britain’s exit is postponed, the UK will leave on a so-called ‘no deal’ basis. This would have various implications for businesses exporting and importing goods to and from the UK. These include:

  • Additional obligations to register and then pay Import Value Added Tax (VAT) on goods delivered to UK buyers; 
  • The removal of tax relief on items worth £15 or less. 

We recommend you take the time to read the advice from HMRC (the UK tax authority, AKA Her Majesty’s Revenue and Customs) to understand what you’d need to do if the UK leaves the EU with ‘no-deal’.

If you’re an EU-based business exporting to the UK, you may also want to review the advice from the European Commission, which can be accessed here.

 

What you need to know about the changes
If the UK leaves the EU with ‘no deal’, the UK government plans to change the Import VAT rules for parcels worth £135 or less shipped to UK buyers (including businesses and individuals) from outside the UK. This means that sellers outside the UK will have to pay Import VAT for these parcels sent to UK buyers after the UK leaves the EU, even if the goods were sold before.

These changes will apply if all of the following criteria are met:

  • the seller is established outside the UK - in or outside the EU (including the Channel Islands);
  • the total value of all the goods in the parcel is £135 or less;
  • the parcel doesn’t contain goods subject to any excise duty (such as alcohol); and
  • the goods are imported into the UK in parcels such as packages, envelopes or other items sent by post, express operator or freight.

Please note: The existing tax relief on goods worth £15 or less for sellers outside the EU will also be removed. Excise goods such as alcohol require Import VAT, Customs and Excise duty to be paid no matter the total value. This will be collected from the UK buyer via the parcel carrier.

If sellers don’t follow the new rules for Import VAT:

  • Your parcels could be delayed or stopped from entering the UK.
  • Your UK buyer may have to pay extra taxes and fees.
  • You could be fined up to £1,000.

How to pay Import VAT
In case of a ‘no deal’ Brexit, there will be two ways to pay your Import VAT on parcels:

  1. Register for HMRC’s new online service to report and pay the Import VAT due.
  2. Pay a carrier that offers a service to pay Import VAT on your behalf.

If you use a local carrier to pay Import VAT, you’ll need to check that your payment has actually been made to HMRC.

What you can do now
These are uncertain times for all of us, but you can take some steps to prepare in case there’s a ‘no deal’ Brexit.

If you choose to report and pay the Import VAT directly to HMRC yourself, you should register for the new online service now.

To register, you’ll need a Government Gateway user ID and password. If you don’t have a user ID, you can create one when you register. You’ll also need your business contact details and details of your business accounting time periods.

How to use the online service:

  1. Register for the service.
  2. Choose an accounting period from the selection.
  3. Keep records of goods sold to the UK worth £135 or less for each accounting period.
  4. Work out the Import VAT due on the goods sold to the UK for each accounting
  5. period.
  6. Tell HMRC how much Import VAT you owe for each accounting period.
  7. Pay HMRC the total Import VAT due for each accounting period.

Please note: Don’t use the online service to report or pay Import VAT if the parcels you send to the UK are worth more than £135. UK buyers must pay the VAT on parcels of this value.

Once you’ve registered, you’ll receive a ‘parcels reference’. You need to include this reference in any documentation accompanying parcels you send to UK buyers after any ‘no deal’ Brexit. Parcels without the correct reference may be delayed.

Please note: Even if you already have a VAT number because you forward deploy goods to the UK, you may still need to register for this service if you're shipping goods of this value to UK buyers directly from outside the UK.

Sellers must also register even if they sell zero-rated goods (e.g. books, children’s clothes or footwear) and must still submit a report even if no UK import VAT is due.

Storing goods in the UK before they’re sold

If you bring in goods to the UK to be stored before they are sold to your UK buyers, you will still need to comply with existing customs controls and VAT rules. However, you may wish to consider whether it makes sense to ship some goods in advance of any ‘no deal’ Brexit in order to avoid any potential customs delays arising from Britain’s withdrawal from the EU without a deal.

 

Further Information

For more information about these changes, including guidance on different import VAT rates and any exceptions, go to GOV.UK. You will also be able to find more information about potential changes in the event of the UK leaving the EU without a deal.

This note is general in nature. eBay does not give tax or legal advice. Please speak to your professional adviser for advice specific to your circumstances.

 

While the future is uncertain, we're monitoring events closely. We'll update you with the latest developments that impact your eBay business accordingly.

VAT implications: Imports into the UK after a 'no-deal' Brexit

 

  Buyer Seller
Threshold for low value consignments with a value of less than £15 abolished
Please refer to "Parcels with a value < £135"
abolished
Please refer to "Parcels with a value < £135"
Parcels with a value
of up to £135
Seller price includes VAT Liable to pay UK import VAT on parcels:
Option 1: Registration with HMRC for Import VAT on parcels service
Option 2: Engage a parcel operator to fulfil importation procedure
Parcels with a value
of more than £135
Liable to pay UK import VAT upon delivery of the parcel No import VAT liability in the UK

 

 

VAT implications: Imports into the EU after a 'no-deal' Brexit*

 

  Buyer Seller
Threshold for low value consignments with a value of up to €22 No VAT due No VAT due
Parcels with a value
of more than €22
Liable to pay local import VAT upon delivery of the parcel No import VAT liability in the buyer's EU country

 

*According to the information and legislation published until 23 August 2019