Changes to VAT treatment of overseas goods after the Brexit transitional period

Following the official departure from the EU, Great Britain is currently in the transitional period until 31st December 2020. From 1st January 2021, a new model for VAT treatment of goods arriving from overseas will be introduced.

HMRC will be moving the point at which VAT is collected from the current point of importation to the point of sale. This will apply to imported goods from outside the UK in consignments that do not exceed the value of £135. From 1st January 2021, UK supply VAT will apply to these consignments rather than import VAT.

Online marketplaces will be responsible for collecting VAT where they are involved in facilitating a sale. Where an overseas seller sends goods directly to UK customers, without the involvement of online marketplaces, will be required to register with HMRC and account for the VAT.

The new rules will also apply for business to business sales that do not exceed £135 in value. However, if the business customer is VAT registered in the UK and has a valid VAT registration number to provide to the seller, then the VAT will be the responsibility of the customer by reverse charge.

Overseas sellers will still need to account for VAT on goods already in the UK and sold to UK customers directly, without any online marketplace involvement.

These measures are being brought in to ensure that goods arriving in the UK from EU and non-EU countries, are treated fairly. It will also address the problem of overseas sellers who fail to pay the correct amount of VAT on the sale of goods that are already in the UK at the point of sale.

Further details on the VAT changes for overseas goods sold to customers after the transition period, can be found on the government website.