VAT rules have changed after Brexit, and now businesses need to understand the current systems.
From 1 January 2021, goods that have moved into the UK from the EU are considered imports which means that import VAT will be payable unless the supply is zero-rated.
In order to help businesses, it was confirmed that they could elect to account for VAT on all goods imported into the UK using a postponed accounting system.
Who can account for import VAT on their VAT return
If your business is registered for VAT in the UK, you can account for import VAT on your VAT return for goods you import into:
• Northern Ireland from outside the UK and EU
• Great Britain (England, Scotland and Wales) from anywhere outside the UK
You can also account for import VAT for goods you move between Great Britain and Northern Ireland that are declared into a customs special procedure, when they are removed from that special procedure.
When can you account for import VAT on your VAT return
You can do this if:
- The goods you import are for use in your business
- You include your VAT registration number on your customs declaration
Imports of goods in consignments of £135 or less
For imports of goods in consignments of £135 or less, VAT is no longer collected at import, but rather when the goods are sold.
Businesses making sales of goods of £135 or less in value (per consignment) to customers in the UK, where the goods are outside the UK at the point of sale, are liable to register and account for VAT on those sales.
For EU businesses
EU businesses selling B2C to British customers must register for UK VAT as of 1 January 2021 if they are sending individual consignments with a value below £135. EU businesses may also be required to register for VAT in the UK if they are acting as importer of record into the UK.