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At the end of the transition period, the government will introduce a new model to deal with value-added tax on goods entering the UK from outside the UK. This will ensure that goods from EU and non EU countries are treated in the same way, and that UK companies are not disadvantaged by competition from VAT free imports. It will also improve the efficiency of levying value-added tax on imported goods and solve the problem that overseas sellers fail to pay the correct amount of value-added tax on goods already sold in the UK at the point of sale.

The document follows the release of the border operation model on July 13, 2020, and extends the part covering the treatment of value-added tax on goods not exceeding £ 135 from January 1, 2021.

This article does not deal with matters specified in the Northern Ireland protocol. The government will continue to work to address the impact of the Northern Ireland protocol, including value-added tax and excise tax. The government is committed to providing guidance on how the Northern Ireland protocol will operate before the end of the transition period.

Summary of changes

For goods imported from outside the UK, the value of the consignment does not exceed £ 135 (consistent with the tariff liability threshold), we will transfer the point of VAT from the point of import to the point of sale. This means that these goods will be supplied by the UK for VAT, rather than import VAT.

The new arrangement will also involve the elimination of the low value consignment exemption, which will reduce the import value-added tax on consignments of goods valued at £ 15 or less.

They participate in the online market (OMP) to promote sales and will be responsible for collecting and accounting VAT.

For goods sent overseas and sold directly to UK consumers without OMP, overseas sellers will be required to register and pay value-added tax to HMRC.

The value of business to business sales does not exceed £ 135 and will also be subject to the new regulations. However, if a commercial customer registers for VAT in the UK and provides a valid VAT registration number to the seller, the customer will calculate vat through reverse charges.

This change does not apply to consignments containing excise goods or non-commercial transactions between individuals. The existing rules will continue to apply to these transactions.

In addition, for the sales of goods by overseas sellers (goods have been sold in the UK at the point of sale), we will transfer the accounting responsibility of value-added tax from overseas sellers to OMP to promote sales.

Overseas sellers will continue to be responsible for the accounting treatment of VAT that has been sold in the UK and directly to UK consumers without the involvement of OMP.

Although these arrangements will mean that for many goods with a value not exceeding £ 135, no value-added tax will be charged at the border, customs declaration will still be required for non-financial purposes. However, considering that the role of customs declarations on affected goods has changed, some facilities will be provided, including the use of reduced data sets and batch declarations

The import of goods by UK value-added tax registered enterprises not covered in the notes to this guide will also change from January 1, 2021. Enterprises will be able to use deferred VAT accounting to account for VAT input tax. Goods imported from anywhere in the world. This means that enterprises will be able to declare and recover import value-added tax according to the same value-added tax declaration, without having to pay in advance and recover later according to the normal value-added tax recovery rules.

The measure is divided into two parts, which will change the way in which value-added tax is levied when selling goods under the following circumstances:

L sell goods at the point of sale to UK customers who are located outside the UK and the supply involves the subsequent import of goods into the UK.

L goods sold to UK customers, who are located in the UK, sold by overseas sellers and promoted by OMP.

Goods whose point of sale is outside the UK

These new arrangements will apply to goods sold to GB customers with a consignment value of no more than £ 135. This is consistent with the threshold of tariff reduction and exemption, so as to minimize the impact on customs procedures. Goods above this value will continue to be bound by existing customs rules and procedures, and from January 1, 2021, UK VAT registered enterprises will be able to use extended VAT accounting to account for import VAT on their VAT returns.

For most consignments with a value of no more than £ 135, VAT is not charged at the time of import or delivery to the customer, but calculated at the point of sale.

For VAT purposes, the supply will be treated as follows:

L if OMP is not involved in facilitating sales, the seller will directly provide supplies to consumers, which will be deemed to occur in the UK and subject to UK value-added tax.

L if OMP participates in facilitating sales, they will be regarded as supplying products to British consumers for the purpose of value-added tax, which will be regarded as being carried out in the UK, and UK value-added tax will be charged accordingly.

In both cases, the value of goods used for VAT purposes will be based on the price they are sold to consumers, rather than any valuation calculated at the time of import.

For goods located overseas at the point of sale, the new arrangement will apply wherever OMP is established or enterprises selling goods are established.