The new UK VAT rules have been released and will take effect on January 1, 2021

From January 1, 2021, after the end of the Brexit transition period, the UK government will introduce a new border operation model to process VAT on goods entering the UK, ensure that goods from EU and non-EU countries are treated the same, ensure that UK businesses are not adversely affected by VAT reductions or exemptions on imported goods, improve the efficiency of collecting VAT on imported goods, and solve the problem of sellers outside the UK not paying full VAT on domestic goods.

An OMP (Online marketplace) is an electronic interface (website or mobile application) that facilitates the sale of goods to customers, such as a marketplace, platform, portal or similar website.

3. Non-UK sellers who ship goods from within or outside the UK to UK customers and do not have OMP participation need to register and pay VAT.

4. If the OMP is involved in promoting sales, it is responsible for collecting and accounting for VAT.

If the OMP is not involved in facilitating the sale and the seller sells the goods directly to a UK customer, the transaction is deemed to take place in the UK and is subject to UK VAT.

If OMP is involved in procuring a sale, for VAT purposes OMP will be deemed to be supplying the goods to the customer and will charge UK VAT accordingly.

In both cases, the value of the goods for VAT calculation is the price sold to the customer, not the valuation calculated at the time of import.

When selling goods to customers, non-UK sellers are deemed to be making zero-rated supplies to OMP, which is equivalent to a B2B transaction. Therefore, non-UK sellers need to register for VAT in the UK and can recover the import VAT incurred during the import process if they comply with the VAT deduction rules. Non-UK sellers are not responsible for declaring VAT on sales made through OMP.

Non-UK sellers who do not have a company established in the UK do not have a VAT registration threshold, but are obliged to register for VAT as long as they make sales or hold shares for sale in the UK.