Brexit and shipping in the UK

With Brexit fast approaching, it’s important to know how it could affect your business when shipping in and out of the UK. We’ve outlined below some of the changes coming into effect in the new year.

At the end of the transition period, ending on the 31st December 2020, the UK government will introduce a new model for VAT treatment of goods arriving into the UK. What this means is the way the UK is collecting VAT is changing. They are making these changes because they want to ensure that goods from both the EU and non-EU are treated in the same way.

In a nutshell, online marketplaces (OMP) and/or businesses that sell goods into the UK need to register with HM Revenue and Customs (HMRC), collect VAT from customers, and remit VAT to HMRC quarterly.

These changes have been posted by the UK government however they are still subject to change as the deal has not completely been finalised.

Currently, you have to pay import VAT on goods that are valued at £15.00 or more entering the UK. This is known as Low-Value Consignment Stock relief. This threshold will be increasing to £135.00 in the new year. Imported consignments not exceeding £135.00 will now be subject to sales (supply) VAT instead of import VAT.

This means that import VAT will be charged to the UK consumer by the UK or non-UK seller at the point-of-sale. The seller then has to report and pay the collected VAT through a regular UK VAT return.

A simplified customs declaration will still be required. Goods above the £135.00 threshold will be subject to VAT and customs in the current way. Now the finer details of this part of the Brexit deal are still being worked out but the main points are:

If you are a UK VAT registered importer then you should use the Simplified Customs Declaration process or delayed supplementary customs declarations to account for Import VAT. These systems are already in place, ask us about them if you have any questions!

If you are a Non- UK VAT registered importer you have to report and pay Import VAT as part of the customs processes.

As more details unfold we will update this space, so stay tuned for more information on the changing duty and taxes process for the UK.

Some links you might find useful are below:

• Changes to VAT treatment of overseas goods sold to customers from 1 January 2021
• The UK transition
• Check how to pay duties and VAT on imports
• Get an EORI number (applicable for businesses sending B2B shipments to the UK)
• Import, export and customs for businesses: detailed information
• Zero rating books and printed matter (VAT Notice 701/10)