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New UKimport VAT rules if UK leaves EU with no deal

With the UK been given a six-month extension to leave the European Union, a no deal could still every much be on the cards. If the United Kingdom (UK) leaves the European Union (EU) without a deal, the UK import VAT rules will change for goods sold to UK buyers that are sent in parcels. The changes will affect the rules for reporting and paying UK import VAT and will impact sellers outside the UK.

Current rules whilethe UK is in the EU

Under the existingrules, parcels imported into the UK from the EU are not subject to import VAT.For imports from non-EU countries, the goods are subject to import VAT unlessthey are covered by low value consignment relief, currently £15 or less perpacket.

Rules after the UKhas left the EU

The rules differdepending on the value of the goods in the parcel. Low value consignment reliefis withdrawn.

  • Parcels with a value of £135 or less

Sellers outside theUK sending parcels to the UK where the value for all goods in the parcel is£135 or less, must pay the UK import VAT for any parcels sent to UK buyersafter the UK leaves the EU. This includes the situation where goods were soldbefore the UK leaves the EU, but not sent until after. Sellers outside the UKinclude those in the EU, those outside the EU and the Channel Islands.

For the Isle of Man(IOM) and UK, VAT is treated as one, so VAT will have been charged by the IOMsupplier, where appropriate.

This will includeany goods worth £15 or less as they will no longer be eligible for the existingtax relief.

VAT will only beapplied where the goods being purchased would be subject to VAT if purchasedwithin the UK.

  • Parcels with a value of more than £135

When the value forall goods in the parcel is more than £135, UK buyers will need to pay the UKimport VAT and any customs and / or excise duty on these goods. The parceloperator will apply any necessary charges to the parcel and seek the paymentdirect from the UK buyer. For excise goods - import VAT, Customs and Exciseduty is due regardless of value, and will be collected directly from the UKbuyer by the parcel operator.

If sellers outsidethe UK sell goods above and below the £135 threshold to UK buyers, the sellershould only report and pay the UK import VAT on parcels containing goods worth£135 or less .

There will be twoways for sellers outside the UK to pay the UK import VAT. HMRC’s new online parcelregistration service is open and overseas businesses areencouraged to register now and get their parcels reference so they are ready touse it if the changes are introduced in case of no deal. Alternatively, theycan pay a parcel operator that offers a service to pay the UK import VAT toHMRC on the sellers’ behalf.

If sellers do notfollow the new UK import VAT rules, parcels may be delayed or stopped fromentering the UK. In addition, the UK buyer may have to pay extra tax and fees,and the seller may have to pay a penalty of £1,000.

More information about thesepotential changes, or others in the event of the UK leaving the EU without adeal can be found at A communications pack on this topic is alsoavailable on GOV.UK.

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