Brexit planning: VAT on overseas goods

HMRC has published 2 separate pieces of guidance on how businesses will deal with VAT when selling overseas goods to customers within Great Britain from 1 January 2021. One guide provides advice for business selling directly to customers and the other is for sales via online marketplaces.

The guidance outlines that VAT is to be charged at the point of sale for goods under a value of £135 from 1 January 2021 and makes it clear that for both direct sales and those through an online marketplace that the seller must add the value of individual items sent in a consignment together. If this exceeds £135 then they may be liable for import VAT and Customs duty. This may result in an adjustment to the VAT already accounted for at the point of sale.

The guidance also confirms that normal rules for the content and format of VAT invoices apply and that the seller must keep records, including invoices, for six years.

The guidance highlights that businesses, selling directly to customers who are currently operating within the VAT flat rate scheme (FRS) have to decide whether to stay in the scheme from 1 January 2021. It confirms that any sales through an online market place where the marketplace is liable to account for the VAT will not be included in the FRS calculation from that date.