The new Brexit VAT rules

It’s highly likely that you’ve heard about the new Brexit VAT rules for imports and exports, which came into force on January 1^st. But, if you haven’t, you’ve certainly landed in the right place. We have created a helpful guide outlining everything that you need to know.

This new model for the VAT treatment of goods arriving into Great Britain from outside of the UK was introduced on January 1^{st ,}2021 and aims to ensure that any goods from EU and non-EU countries are treated in the same way. Why? The new rules will mean that UK businesses are no longer disadvantaged by competition from VAT free imports.

At the same time, the new rules also aim to significantly improve the effectiveness of VAT collection on imported goods, whilst addressing the problem of overseas sellers that fail to pay the right amount of VAT on sales of goods that are already in the UK.

So, what do the changes mean?

Here’s what it will mean for your business. Basically, for all imports of goods from outside the UK that exceed £135, VAT will be collected from the point of importation right through the point of sale.

• The new rules will see the abolition of Low Value Consignment Relief. This relieves import VAT on consignments of goods valued at £15 or less.

 

• For goods sent from overseas and sold directly to UK consumers, retailers will be required to register an account for VAT to HMRC.

 

• All on online marketplaces will now be held responsible for collecting and accounting for the VAT.

 

• Overseas sellers will remain responsible for accounting all VAT on goods already in the UK and sold directly to UK consumers.

 

For imports of goods by UK VAT registered businesses which are not covered by the provisions, there are also a number of changes which came into play on January 1^st, 2021. For example, businesses will be able to use postponed VAT accounting to account for import VAT on their VAT return for goods imported from anywhere in the world.

But what does this mean? As a result of this new rule, businesses will be able to declare and recover import VAT on the same VAT return instead of having to pay upfront and recover it later.

 

Why React Accountancy?

Here at React Accountancy, we provide trusted accountancy services to start-up, established and multi-national businesses across a diverse range of industries.

From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business.

All of our team has years of experience in providing accountancy services that support your business including complex financial issues.

Get in touch today for further information about any of our services.

 

You can reach us on 01914324110 or contact us via email using info@reactaccountancy.co.uk