From 1 January 2021 the new post-Brexit guidelines on value added tax (VAT) will be in force in the United Kingdom, to be applied to goods entering the country from abroad. The guidelines are included in a policy document entitled “Changes to VAT treatment of overseas goods sold to customers from 1 January 2021”, first published last July and finally approved on 5 October by the UK tax authority.

It is, in essence, a guideline for businesses paying VAT in the United Kingdom on the treatment of the tax applied to imported goods. Let us go over the salient points again:

  • Products imported from EU and non-EU countries will be treated in the same way, and British companies will not be disadvantaged by competition from VAT-exempt imports
  • Foreign companies that already sell goods in the UK through a permanent point of sale will be eligible for VAT
  • Also from 1 January 2021, the UK will start collecting VAT at the point of import, rather than at the point of sale, for goods not exceeding GPB135
  • For all shipments of imported goods of a value not exceeding GPB135, UK supply VAT, rather than import VAT, will be due
  • The Low Value Consignment Relief is abolished, which relieves import VAT for shipments of goods with a value of GBP15 or less
  • Online markets (OMP) will be responsible for collecting and accounting for VAT
  • For online sales of goods by foreign companies, where the goods are already in the UK at the point of sale, responsibility for accounting for VAT will be transferred from the foreign seller to the WIPO which facilitates the sale
  • For goods shipped from abroad and sold directly to UK consumers without the involvement of the WIPO, the foreign seller will be required to register and account for VAT
  • For goods over GPB135, normal customs and VAT rules will apply, which means that import VAT will be chargeable and VAT on supplies will not have to be charged to the point of sale
  • The rules also change for B2B sales, from business to business: for transactions over GPB135, if the business customer is a VAT registered customer in the UK and provides the seller with his valid VAT number, the VAT will be accounted for by the customer through a reverse charge. The changes will not apply to shipments of goods containing excisable products or to non-commercial transactions between private individuals
  • Companies will be able to use deferred VAT accounting to record import taxes in their VAT return for goods imported from anywhere in the world. This means that the company will be able to declare and recover import VAT on the same VAT return instead of having to pay it in advance and recover it later.

For detailed information on Brexit post Brexit consultancy forms and the advantages offered by the Maltese Government please contact the Malta Business Agency offices by filling in the following form:

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