Exports
If you are a VAT registered person or business and you export goods, from 1 January 2021 all sales of goods to a destination outside of the UK will be classed as Exports and therefore can be zero-rated as long as they meet the normal conditions in VAT Notice 703 Section 3.
These include obtaining evidence to show the goods have left the UK and exporting the goods within HMRC’s specified time limits (see VAT Notice 703 paragraph 3.5 for further details).
For consignments costing less than 150 Euros, import VAT will not be due but supply VAT will be chargeable instead. Supply VAT will be accounted for on the sale. You will need to account for VAT in the EU member state of destination of the sale. For sales falling between 1 January 2021 and 30 June 2021 you will need to consider who will be responsible for importing the goods into the destination country, you as the seller, or the customer. If it is you as the seller, then you will need to take local advice in the country of destination to determine if you need to register for VAT in that country.
From 1 July 2021, the EU will be introducing new rules for sales to non VAT registered persons in the EU (distance sales). The new scheme will be called the Import One Stop Shop (IOSS) and it will work in a similar way to the VAT MOSS scheme for digital services.
The IOSS scheme is aimed to avoid the need to VAT register in multiple EU countries.
Imports
From 1 January 2021, all supplies into the UK will be classed as Imports.
The import VAT exemption for goods valued at £15 or less has been removed in Great Britain for goods imported from outside of the UK.
For consignments less than £135, the UK will no longer collect Import VAT but will instead collect UK VAT at the time of supply from the overseas seller or if they are using an Online Marketplace, the responsibility passes to the Online Market Place.
If you are UK VAT registered and purchasing goods from outside of the UK, you will need to inform the seller of your VAT registration number. The seller should then issue an invoice stating for example, “Reverse Charge: Customer to Account for VAT”. The VAT figure should then be recorded in box 1 and box 4 of your VAT return.
Please note for both Imports and Exports there are different rules for transactions involving Northern Ireland.
If you have any further questions regarding this subject, please contact us.
January 13th, 2021
