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UK updates 2021 ecommerce imports and marketplace reforms

  • Oct 6, 2020 | Richard Asquith

The UK’s HMRC has updated its guidance on the new rules for ecommerce imports and marketplace liabilities from 1 January 2021, the end of the Brexit transition period.

Time of supply for ecommerce 2021

The update includes the treatment of transactions crossing the implementation date. The new rules apply to goods with a ‘tax point’ or ‘time of supply’ on or after 1 January 2021. In the UK, the time of supply is the earliest of: payment; invoice; or delivery of goods. So if payment is made on 31 Dec, but goods not dispatched until 1 Jan 2021, then the time of supply is before the changes.

Who should UK VAT register?

HMRC also clarified who should register for UK VAT to report transactions under the new regime? Under the existing low-value consignment stock relief, import VAT is often paid at customs. This is changing to a range of situations:

  • Where the imported goods consignment is ≤135, and sold by an overseas seller without an OMP, then the seller should VAT register for sales to consumers. However, if the customer can provide a UK VAT number, then the reverse charge may be used.
  • Overseas companies selling goods already in the UK to UK consumers will need to be UK VAT registered. They should be registered under the current rules.
  • Any overseas OMPs that facilitates sales of goods to UK customers if: UK or EU seller and imported consignment is ≤135; or overseas sellers selling from UK-located stocks

Online Marketplace information requirements

HMRC has also advised on the basic information Online Marketplaces (OMPs) will need to collect to determine where they become the deemed supplier, and how to calculate the correct VAT. This includes:

  • Classification of the goods, and what VAT rate should apply
  • Where the goods were dispatched from after the sale, and whether in the UK or not
  • For imported goods, the intrinsic value of the consignment
  • In the case of a potential B2B sales, and possible reverse charge, the VAT number of the customer

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Need help with your UK VAT compliance?

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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 won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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