There are different rules:
overview
Consignments of goods valued at £135 or less that are outside:
- sold in the UK and sold through an online marketplace to customers in the UK (England, Scotland and Wales), UK VAT will be charged at the point of sale
- UK and EU sold and sold through an online marketplace to customers in Northern Ireland will be subject to import sales tax
The £135 limit applies to the value of an entire imported shipment, not the separate value of individual items found in a shipment.
If these goods are sold through an online marketplace, the online marketplace is subject to VAT.
Online marketplaces are also liable for VAT on goods of any value that are at the point of sale in the UK and sold through an online marketplace by a foreign business.
These rules do not apply to imports of:
These rules also do not apply to goods consigned from Jersey and Guernsey where VAT is collected under the Import VAT Accounting Scheme and remitted to HMRC.
What an online marketplace is
The HMRC definition of an online marketplace is a business that uses a website or mobile app (e.g. a marketplace, platform or portal) to process the sale of goods to customers that meets all of the following conditions :
- determines in any way the terms of how goods are delivered to the customer
- involved in any way with the authorization or facilitation of customer payments
- is involved in the ordering or delivery of the goods
A business will not be classified as an online marketplace if it offers only one of the following services:
- Processing payments for the delivery of goods to the customer
- Listing or advertising of goods
- Redirecting or transferring customers to other websites or mobile phone apps where goods are offered for sale without further involvement in any sale that may occur on that website or app
Goods located at the point of sale outside the UK
The online marketplace must determine the shipment value of the goods by determining their “intrinsic value”, which is the price at which the goods were sold without:
- Transport or insurance costs, insofar as they are not included in the price and are not shown separately on the invoice
- other identifiable taxes and duties
Unless shipped individually, the seller must add up the individual values of all items in a shipment to get the total value of the shipment.
If the seller makes changes to the value of the shipment so that the total value exceeds £135, they may be liable for import VAT and customs duties and will need to adjust the VAT already recorded at the point of sale.
The low value consignment exemption, which is an import sales tax exemption for goods valued at £15 or less, has been removed in:
- UK for goods imported from outside the UK
- Northern Ireland for goods imported from outside the UK and EU
Shipments valued at £135 or less
The online marketplace must calculate and report VAT at the point of sale, unless the shipment is a business to business sale and the customer has provided their UK VAT number.
In order to calculate and remit VAT, the online marketplace must:
The online marketplace is liable for under-reporting of VAT unless it can show that it has taken reasonable steps to ensure that the correct VAT has been charged.
Business to business sales to UK VAT registered customers
The online marketplace does not have to calculate and report VAT if the customer provides it with their VAT number. The online marketplace can confirm the accuracy via the online service.
The online marketplace can add a note to the invoice (e.g. by writing “Reverse Charge: Customer to Account for VAT to HMRC”) and then send it to the UK business customer.
The business customer will then be responsible for accounting for the applicable VAT on their VAT return if the goods are supplied in the UK using a reverse charge system.
If the goods are being delivered in Northern Ireland, the business customer will be responsible for accounting for any VAT due. You can settle this via the deferred VAT statement or other means of paying import VAT.
In both cases, the business customer can reclaim the VAT as input VAT in the same VAT return, according to the normal VAT refund rules.
Shipments over £135
When importing the goods into the UK from outside the UK or into Northern Ireland from outside the UK and EU, normal VAT and customs rules will apply.
Find out more about how imported goods are treated for VAT purposes:
Goods located at the point of sale in the UK
importing goods for sale via online marketplaces
The overseas seller remains liable for import sales tax and customs duties when the goods are first brought into the UK.
When the Goods are sold to the Customer, the overseas seller is deemed to have made a tax-free delivery of the Goods to the Online Marketplace, referred to as “accepted delivery”. The foreign seller does not have to issue invoices to the online marketplace for accepted deliveries that are considered tax-free.
UK VAT is charged at the point of sale.
The online marketplace is obliged to pay VAT on sales made through its marketplace by a seller who is not established in the UK. If the goods are located in Northern Ireland at the point of sale and are sold to a customer in Northern Ireland, the online marketplace will be liable for VAT if the seller is not based in the UK or EU. The seller remains liable for VAT where the goods are destined for a business customer who gives them their UK VAT number.
Overseas sellers who only offer tax-free shipping can either:
Overseas sellers who are VAT registered can reclaim the import VAT they paid when the goods were first imported into the UK. The usual regulations apply as to which sales tax can be reclaimed as input tax. Further information on input tax can be found in VAT assessment 700.
Goods sold to UK VAT registered businesses
The online marketplace should provide all the details of the sale (including the company’s VAT number) to the seller on the marketplace. The seller must register for VAT if not already registered. You are required to charge VAT on the sale. The online marketplace must conduct VAT checks on foreign sellers.
VAT invoices
Normal VAT invoice content and format rules apply.
The online marketplace should issue a full paper or digital invoice for goods.
Goods sold in Northern Ireland from outside the EU are not required to issue a VAT invoice from the online marketplace.
VAT records
The online marketplace must keep complete records (including VAT invoices) for 6 years from the date of sale of goods.
Learn more about keeping VAT records.
VAT and goods returned to you
Read the guide to VAT and overseas goods sent to and returned from the UK to find out how to deal with VAT if you’ve sold goods sent from abroad to a UK customer and they’ve sold them to you be sent back.
Goods sold before January 1st, 2021
If the online marketplace receives payment for an order before 11:00 p.m. on December 31, 2020 and ships the item after that time, these rules do not apply.
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