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Goods under 135£ directly sold by EU businesses to UK individuals

New rules will apply when a EU business sells goods for £135 or less to a UK customer and the goods are located outside the UK at the time of the sale. In essence, the point at which VAT will be collected will move from the point of importation to the point of sale. In effect, import VAT will not be payable on the importation of these consignments but UK ‘supply’ VAT will be payable at the point of sale:

  • the value of the goods for VAT purposes will be based on the price at which they are sold to the consumer rather than any valuation calculated at the point of importation.
  • The £135 threshold is determined per consignment, and not on individual goods within a consignment. A consignment’s value is based on the VAT exclusive price of the goods in the consignment and does not include separately stated freight charges. The threshold is intended to align with the threshold for customs duty liability.

For goods sent from overseas and sold directly to UK consumers without OMP involvement the new rules can therefore be summarized as follow:

  • VAT registration is required : the overseas seller will be required to register and account for the VAT to HMRC. There is no VAT registration threshold for businesses not established in the UK, so the seller is liable to register and account for VAT as soon as it starts making sales or holds stock for sale in the UK.
  • VAT is not due on import of goods. Although these arrangements will mean that for many consignments not exceeding £135 in value there will no longer be any VAT to collect at the border, customs declarations will still be required for non-fiscal purposes. However, in recognition of the changed role of the customs declaration for affected consignments, a number of facilitation’s, including the use of reduced data sets and bulk declarations will be available.
  • UK VAT is due on the sale.
  • Invoice: the seller will be required to provide the customer with a VAT invoice at the point of sale. The normal rules for the content and format of VAT invoices will apply, so the invoice can be in paper or digital form and will be covered by the existing concessions for simplified invoices.  Read more information on record keeping.
  • Where the sale is direct from the seller to the consumer without the involvement of an OMP, there will be a requirement for the seller to ensure that a copy of the tax invoice accompanies the goods in transit. This can either be in digital or paper format and could be inside the consignment or be uploaded electronically by a parcel carrier or freight operator.
  • Record keeping : direct sellers will be required to keep electronic records of their sales for a period of 6 years and to provide records electronically to HMRC on request.