Navigating VAT and E-commerce in England After Brexit
Early last year marked the end of the transition period between England and the European Union, with England no longer being a member of the EU. Since then, a new trade agreement between the EU and the UK has come into effect. This new agreement brings significant changes concerning VAT. With a population of 66.6 million and Amazon as the largest e-commerce platform, England remains an interesting market. But how exactly does VAT work with e-commerce in England, when do you need a UK VAT number, and what should you consider when doing business there? This blog provides further insight.
When Do I Need a UK VAT Number?
The distance selling arrangement does not apply to England, as it is no longer part of the EU and is considered a “third country”. Deliveries to England fall under “export to a country outside the EU”. You will need a UK VAT number in the following three scenarios:
- Exporting products from the Netherlands (or another EU member state): You need a UK VAT number when you export products from the Netherlands (or another EU state) to customers in England.
- Exporting products from England: When exporting products from England to countries outside the United Kingdom, you also need a UK VAT number.
- Using Amazon’s FBA Program: Finally, a UK VAT number is required when using Amazon’s FBA program and selling in England, Wales, Scotland, and Ireland (note: Northern Ireland is still part of the EU!).
If one of these situations applies to you, you can apply for your UK VAT number through the British tax authorities. VAT declarations in England are made quarterly.
Value of Goods and VAT Responsibilities
- For Goods Below GBP 135: The sender (i.e., you, the webshop) pays the import VAT, and a UK VAT number is necessary. You must file and pay this VAT in England.
- For Goods Above GBP 135: The recipient (i.e., the customer) pays the import VAT and any import duties. As the seller, you are not liable for the import VAT and do not need a UK VAT number.
EORI Number: When Do I Need It?
An EORI number (Economic Operators Registration and Identification) is an identification number needed by entrepreneurs dealing with customs in international trade. It’s required when applying for customs permits or making customs declarations. You can apply for an EORI number via the customs page.
Processing Returns from the UK
For products returned from a non-EU country to an EU country, re-importation must be declared to the Dutch Customs, granting an exemption from import duties and VAT. This exemption applies if the goods are returned within three years, in the same condition, and with evidence of their initial export from the EU.
Registering in the UK for VAT
When you need to pay UK VAT on your sales, register your business for VAT with the HMRC (Her Majesty’s Revenue & Customs). The registration process involves two steps, starting with opening a ‘Government Gateway Account’.
Making Tax Digital
The UK tax authority, HMRC, has initiated the digitalization of tax administration and reporting, starting with VAT. From April 1, 2022, all VAT-liable businesses in the UK must comply with the Making Tax Digital (MTD) legislation. This includes digital record-keeping and submitting VAT returns via an API link.
UK VAT Matters and Staxxer
The VAT landscape can be complex, especially with the changes brought about by Brexit. Staxxer assists in applying for a UK VAT number, which also includes obtaining an EORI number for customs. Staxxer can also handle your UK VAT declarations.
For further assistance, Staxxer offers consultations to help navigate these regulations.