On 1 January 2021, a number of other measures were also introduced that are specific to online traders. Similar measures will apply throughout the EU from 1 July 2021 as part of the E-commerce VAT Package (the EU delayed implementation to this date).
The E-commerce VAT Package is being introduced throughout the EU to combat e-commerce VAT evasion. The EU Commission estimates that e-commerce VAT evasion costs the EU €5 billion a year – this is expected to grow to €7 billion in 2021. The measures are intended to tackle this fraud by making Online Market Places (OMPs) responsible for accounting for local VAT.
From 1 January 2021, distance selling regulations no longer apply in the UK. EU distance selling thresholds no longer apply for distance sales made to UK customers.
This means non-UK sellers will need to register for UK VAT and charge UK VAT on distance sales made, irrespective of the value of the sales. There is no registration threshold – registration applies immediately.
Where an OMP facilitates sales to UK customers, the OMP may charge the VAT (see below) instead of the online trader.
Low Value Consignment Relief (LVCR) will not apply from 1 January 2021. LVCR allowed imports of less than £15 to take place VAT-free. The current EU limit of €22 is being withdrawn from 1 July 2021 as part of the E-commerce VAT Package.
From 1 January 2021, all imports into the UK are subject to VAT. However, whether import VAT arises and how VAT is accounted for on the sale to the customer depends on a number of factors:
UK VAT will be charged at the point of sale, i.e. at the checkout. This is called ‘supply VAT’. There will be no import VAT.
If an OMP does not facilitate the sale:
If an OMP facilitates the sale, the OMP will account for VAT at the point of sale.
If the overseas seller only sells goods via OMPs in consignments not exceeding £135:
Note: it is possible to obtain a GB EORI number without a UK VAT registration.
Normal customs processes and VAT rules will apply. From 1 January 2021 goods imported into the UK require customs declarations (whether immediate or deferred) and may be subject to customs duty.
VAT-registered business can use postponed VAT accounting to account for import VAT on their VAT return, rather than paying import VAT on clearance and waiting to reclaim this. Please refer to our general Brexit guidance for more details.
The sale to the customer is subject to normal UK VAT. The trader will need to have a UK VAT registration.
B2B sales not exceeding £135 are subject to the reverse charge by the UK customer where a valid VAT number is provided.
B2B sales exceeding £135 are subject to the normal customs and VAT rules. It will be necessary to establish which party is importing the goods into the UK – this will be determined by the INCOTERMS. If the seller is importing the goods, import VAT and customs duty may arise and the onward sale to the business customer will be subject to UK VAT in the normal way.
If the business customer is importing the goods into the UK, it will need to manage the import VAT and customs duty position.
The goods will have been imported into the UK by the trader and normal customs processes and VAT rules will apply. Please refer to our general Brexit guidance for more information.
The seller must be registered for VAT in the UK. The sale to the customer is subject to UK VAT in the usual way, unless the OMP facilitates the sale.
If the OMP facilitates the sales, the OMP is deemed to make the sale to the UK customer. There is a ‘deemed’ supply of the goods from the overseas seller to the OMP. This is treated as zero-rated for VAT purposes. This means the overseas seller is still required / able to register for UK VAT to reclaim any purchase or import VAT it has incurred.
B2B sales are subject to the normal rules. The seller charges UK VAT because the goods are located in the UK at the point of sale. The reverse charge does not apply.
Amazon released guidance for its Selling Partners. From 1 January 2021, Amazon changed the way it operates across the new UK-EU customs border.
The UK is not part of the Pan-EU FBA or EFN from 1 January 2021
The UK is a key market for many online traders
From 1 January 2021 the UK is excluded from the European Fulfilment Network (EFN) or Pan-EU Fulfilled by Amazon (FBA) programme.
Amazon has confirmed that:
To set up a call to discuss the next steps or further information, please contact Kate McDermott: kate.mcdermott@tuerner.com
| Term | Explanation |
|---|---|
| OMP | Online Market Place: any electronic interface (website or mobile application) such as a marketplace, platform, portal or similar that facilitates the sale of goods to customers |
| Consignment | The £135 applies to the value of the consignment as a whole, not individual items within the consignment. Therefore, it is necessary to know whether goods are packaged and sent individually to a customer or part of a consignment with other goods |
| £135 | The £135 value aligns with the threshold for customs duty relief. Simplified customs declarations will be permitted for goods that do not exceed £135 in value. The value of the goods for VAT purposes will be based on the price at which they are sold to the consumer, not the customs valuation declared at import |
| Facilitates | An OMP facilitates a sale if it participates in any of the following, either directly or indirectly:
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Disclaimer: The contents of this document are for general information only and are not a substitute for formal professional advice. Türner & Co accepts no liability for any actions taken or not taken on the basis of this document without taking formal advice from us. Information correct at 3 February 2021.
