UK Requiring Prepayment of VAT?

[jaudette3]

I just received the following email from Stamps.com:

Effective Jan 1, 2021, value added tax (VAT) must be collected for all goods entering the United Kingdom (UK). There will be a 20% VAT rate on goods valued up to £135 (about $180 USD), which you must collect unless your online marketplace (e.g. eBay, Amazon, Etsy, etc.) is already collecting it. Current procedures for goods valued over £135 remain the same. To prevent your UK shipments from being delayed, held, or returned by UK customs in 2021, please take the following steps:

1. Register for a VAT number with the UK: https://www.gov.uk/vat-registration

2. Collect VAT at the time of purchase.

3. Make quarterly VAT return payments to the UK.

In addition, you should include your VAT number on your customs declarations. This process will vary depending on your shipping software, so be on the lookout for instructions early next year. If you have any questions or require assistance, please contact our award-winning Customer Care department.

Anyone familiar with this?

Thanks,
John

[LiveFromNY]

https://www.dlapiper.com/en/us/insig...-to-customers/

I wish them luck enforcing this. Morons.

[Arne]

Brexit fallout. Glad it doesn't work the other way. I've been getting a lot of parts for my current non-Porsche project from the UK, the VAT exemption for outside-the-UK sales been pretty smooth so far.

[LiveFromNY]

It's just a stop-gap to maintain the taxes they've collected from the EU countries. Thoughts are it'll go away for us once we get a proper trade deal in place. Just unintended consequences for the moment.

[raspritz]

There are other implications. UK racers now need a carnet to race in the EU, and most likely vice versa. Or pay a tax of 40% the value of the car. This may kill some of the major races that depend on participation by both UK and EU racers.

[RennTyp]

The VAT change is a co-incidence and not a result of Brexit. The UK is forcing foreign sellers to register with the UK tax authority and collect VAT on their behalf from the buyer - rather than leave it to the shipper to collect on delivery which has been the system until now. The existing system has been subject to wide scale fraud, especially by Chinese internet sellers, and that is prompting the change. If you don't register then you can't label the goods with the correct customs code and the goods will be returned to sender at the border. Apparently the EU is implementing the same change later this year. I'm just the messenger - don't shoot me!

[Arne]

Makes sense, I suppose. Any idea how this applies to private parties with a one-time sale? And how are used parts valued?

[LiveFromNY]

The VAT change is a co-incidence and not a result of Brexit.

It's in the name of the act: Taxation (Post-transition Period) Bill. That said, you're correct in that the bill attempts to resolve issues unrelated to Brexit as well. Never waste a crisis, right?

https://home.kpmg/uk/en/home/insight...riod-bill.html

"In preparation for the end of the Brexit transition period on 31 December 2020, the Government has put the Taxation (Post-transition Period) Bill before Parliament. As expected, the Bill makes provision in respect of changes required to customs, VAT and excise law in order to comply with the provisions of the Northern Ireland Protocol and sets out a new model for the VAT treatment on goods arriving into the UK. "

I had a lengthy conversation with my international tax consultants and have been advised that plans are in the works to address the inevitable unintended consequences for U.S. sellers including low-volume or occasional sellers.

[jaudette3]

Just need the answer to one question? Do you surmise that goods will be held in customs unless VAT has been paid? I do a lot of business in the U.K., enough for this to move the dial a bit for my business.

Thanks,
John

[LiveFromNY]

Just need the answer to one question? Do you surmise that goods will be held in customs unless VAT has been paid? I do a lot of business in the U.K., enough for this to move the dial a bit for my business.

Thanks,
John

Theoretically, yes. I'd err on the side of caution. Lots of workarounds coming that will allow you to avoid registration though as designated platforms will do the work for you.