Page 56 - CBM16

~ Spotlight On ~

1. It does not set, either directly or indirectly, any of the terms So, in this case, neither the seller nor the OMP, if any, will be
and conditions under which the supply of goods is made liable to apply VAT.
2. It is not, either directly or indirectly, involved in authorising
the charge to the customer in respect of the payment made Where the UK VAT registered business provides the OMP or
3. It is not, either directly or indirectly, involved in the direct seller with its VAT registration number, the responsibility
ordering or delivery of the goods to account for VAT will switch to the UK VAT-registered
business customer, who will account for it by means of a reverse
A business which only provides one of the following will also not charge procedure. So, the OMP or direct seller will not be liable
be regarded as an OMP: to account for the VAT in these circumstances. The VAT-
registered business will account for the VAT on their VAT return
1. The processing of payments in relation to the supply of and will be able to recover that VAT as input tax, subject to
goods normal VAT recovery rules, on the same VAT return.
2. The listing or advertising of goods
3. The redirecting or transferring of customers to other Shipments > £135: VAT at the border or, else, optional
electronic interfaces where goods are offered for sale, postponed VAT accounting
without any further intervention in the supply In this case, namely when the consignment has a value exceeding
£135, the current rules will apply:
The wording adopted by UK lawmakers is clearly mirroring that
of the new EU regulations in place from 1 Jul 2021. • Customs duties may apply;
• Import VAT will apply at the border unless the UK
Goodwill clause recipient uses postponed VAT accounting to account for
OMPs will need to be vigilant in ensuring that they get accurate import VAT on their return for goods imported from
information, as above, to apply the correct VAT treatment. This around the world.
means they will have to undertake reasonable and proportionate
due diligence and consider all the information available to UK VAT-registered businesses will be able to use postponed
them in determining the correct VAT treatment. OMPs will VAT accounting to account for import VAT, instead of having
not be held liable for any VAT underdeclared where they can to pay import VAT immediately. UK VAT-registered businesses
demonstrate that they have taken all reasonable steps within using postponed VAT accounting will receive a monthly
their power to ensure that the correct VAT is charged. statement showing the total import VAT postponed for the
previous month, which the business should include in its VAT
OMPs and direct sellers will be required to keep electronic Return.
records of their sales for a period of 6 years and to provide
records electronically to HMRC on request. Businesses can account for import VAT if:

B2B distance selling to the UK with direct shipment from • The goods imported are for business purpose; and
overseas • The EORI number of the business is included in the
There are two different cases: shipments ≤ £135 versus shipments customs declaration; and
> £135. • The VAT registration number is included in the customs
declaration, where needed
Shipments ≤ £135: never VAT or duties at the border
When a UK/overseas merchant ships a B2B consignment with a In the absence of a Free Trade Agreement with the EU, customs
value not exceeding £135 to a UK VAT-registered business with duties may apply. The blueprint for January 2021 holds that
shipment from outside the UK: 60% of trade will come into the UK tariff-free as it moves away
from EU regulations. The merchant will decide whether to apply
• No import VAT will apply at the border; DDP/DAP incoterms in shipping to businesses/consumers in
• The UK VAT-registered business will apply a reverse the UK for shipments with a value exceeding £135. ••
charge;
• No customs duties will apply.

Alan Rhode is a co-founder at Taxmen, the one-stop-shop for legal and tax services to the e-commerce industry.

[1] https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-
customers-from-1-january-2021

56