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UK £135 small parcel VAT portal opens for Brexit

On 14 February, HMRC opened post-Brexit VAT registrations for EU and non-EU companies selling goods below £135 to UK consumers.  The new self-assessment scheme replaces the existing EU £15 VAT-free import limit, which has contributed towards a HMRC-estimated £1.5billion in online VAT fraud each year. 

According to the EU Commission 65% of all consignments from non-EU countries are non-compliant with EU VAT rules

 In 2012, the UK had to close down a £110m Channel Islands loophole on the existing EU £15 threshold. This loophole was credited with accelerating the demise of Virgin Megastore, Woolworths and Zavvi.

Brexit - end of small value consignment relief

The new £135 VAT declarations system is being introduced with the post-Brexit withdrawal of the £15 parcel VAT and customs exemption for non-EU sales to UK consumers.

After Brexit, scheduled for 29 March, foreign sellers of goods to UK buyers may have to register with HMRC to declare and pay UK import VAT at 20%. Alternatively, sellers may use parcel operators to settle on their behalf. Upon registration, businesses will be given a unique seller number to be included in all customs declarations (CN23) or airway bills. This will be verified by the parcel operator to avoid delivery delays.

Marketplaces may be held jointly and severally liable for any VAT due on goods sold on their platforms if notified by HMRC of non-compliance.

Businesses registering for the service must select their own 3-month reporting calendar. Quarterly reporting requires submissions of sales transaction details, including the sales price and VAT calculation. Reports are due  one month and one day after the reporting quarter. VAT due must be settled by the same deadline. Accounting records supporting the submitted reports must be maintained for six years following their despatch.

Sales to UK companies may need to include a VAT invoice which the customer may use to reclaim the import VAT from.

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UK £135 small parcel VAT portal opens for Brexit

February 14, 2019

The UK’s HMRC has opened the registration portal for foreign delivery companies to register post-Brexit VAT on consumer good parcels below £135. This new regime will be triggered under the current default no-transition deal Brexit on 29 March 2019.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.