Brexit has changed the commercial relationships between companies within and outside the UK, and relevant considerations need to be done. The government introduced an exemption threshold for the application of import VAT at £135, so any good worth less than the threshold amount will be exempted from the payment of import VAT.
What if a company decides to import goods into Great Britain to private customers where the consignment does not exceed £135 in value?
VAT will not be due at customs (to avoid any delays in the transit of goods), but it will be declared and paid quarterly by the European company, which needs to have a British VAT number in advance of the transaction. The supplier's liability for VAT will depend on two conditions. If an OMP (Online Market Place) is not involved in facilitating the sale, the supplier will be required to register for GB VAT and account for the VAT due on their VAT Return.
For example, an Italian company sells and ships goods directly for £100 via its e-commerce website to Mr Brown (UK resident). In this case, the Italian firm is liable for the application of any UK VAT (depending on the rates) on the invoice and therefore for the registration of the UK VAT and EORI number.
While, if an OMP is involved in facilitating the sale, the foreign supplier will be exempted for GB VAT registration and account for the VAT due on their VAT Return, since the OMP will be liable for it.
For example, if the same Italian company sells and ships goods for £100 to Mr Brown (UK resident) through Ebay, those will apply VAT to Mr Brown. There will be no obligation for the Italian company to register VAT and EORI in the UK. Depending on what the terms and conditions with Ebay will be, Ebay itself will invoice this service to the Italian firm by charging the VAT paid in Great Britain.
Finally, any Online Market Place or any company running an OMP and/or any business that sells goods directly to customers based in Great Britain, where the goods are outside Great Britain and not exceeding £135 in value, will have to register for GB VAT and submit VAT returns to HMRC.
Domenico Santomasi & Sergio Schittone