Changes to VAT treatment of imported goods up to £135
23 July: From 1 January 2021 VAT on imported goods with a value of up to £135 will be collected at the point of sale not the point of importation, HMRC has confirmed.
HMRC has issued guidance on how it expects imports of goods from outside the UK in consignments not exceeding £135 in value to be treated when the transition period ends.
From 1 January 2021 the point at which VAT is collected will move from the point of importation to the point of sale. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments.
HMRC clarifies that online marketplaces (OMPs) involved in facilitating the sale of imported goods, will be responsible for collecting and accounting for the VAT, even when the goods are in the UK at the point of sale.
For goods sent from overseas and sold directly to UK consumers, the overseas seller will be required to register and account for the VAT to HMRC. Overseas sellers will also remain responsible for accounting for the VAT on goods in the UK when sold directly to UK consumers.
The guidance confirms that business-to-business sales not exceeding £135 in value will also be subject to the new rules. However, where the business customer is VAT registered and provides its registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge.
For imports of goods by UK VAT registered businesses not covered by HMRC's guidance, there will also be changes from 1 January 2021. These businesses will be able to use postponed VAT accounting, meaning that they will be able to declare and recover import VAT on the same return, rather than having to pay it upfront and recover it later, subject to normal VAT recovery rules.
The guidance goes into considerable detail, with specific sections on goods located outside the UK at the point of sale and goods in the UK at the point of sale - sold by an overseas seller through an OMP, as well as general information covering both strands of the measures.