Brexit transition planning: VAT on overseas goods
24 November: HMRC has published guidance on how organisations deal with VAT when selling overseas goods to customers within Great Britain from 1 January 2021.
Following a policy paper published in October, HMRC has now issued two pieces of guidance on VAT covering the sale of goods to customers inside Great Britain. One guide provides advice for business selling directly to customers and the other is for sales via online marketplaces.
From 1 January 2021, VAT is to be charged at point of sale for goods under a value of £135. The guidance outlines the approach to goods outside Great Britain at the time of sale and those that are inside the borders.
It makes clear that for both direct sales and those through an online marketplace that the seller must add the value of individual items sent in a consignment together, if this exceeds £135 then they may be liable for import VAT and Customs duty. This may result in an adjustment to the VAT already accounted for at the point of sale.
The guidance also confirms that normal rules for the content and format of VAT invoices apply and that the seller must keep records, including invoices, for six years.
For those organisations selling directly to customers who are currently operating within the VAT flat rate scheme (FRS), the guidance highlights that they have to decide whether to stay in the scheme from 1 January 2021.It confirms that any sales through an online market place where the marketplace is liable to account for the VAT will not be included in the FRS calculation from that date.