How online marketplaces will deal with VAT for goods from overseas that are sold to customers in the UK.
There are different rules:
Consignments of goods with a value of £135 or less that are outside:
- the UK and sold through an online marketplace to customers in Great Britain (England, Scotland and Wales) will have UK supply VAT charged at the point of sale
- the UK and EU and sold through an online marketplace to customers in Northern Ireland will have import VAT charged
The £135 limit applies to the value of a total consignment that is imported, not the separate value of individual items that are in a consignment.
Where those goods are sold through an online marketplace, the online marketplace will be liable for the VAT unless the goods are being sold from Northern Ireland to a Northern Ireland customer, where the seller remains liable for VAT.
Online marketplaces will also be liable for the VAT on goods of any value that are located in the UK at the point of sale and sold by an overseas business through an online marketplace.
These rules will not apply to the import of:
- consignments of goods containing excise goods – find out more about importing excise goods to the UK from the EU
- non-commercial goods (for example, gifts) – find out more about tax and customs for gifts sent from abroad
The seller remains liable for VAT on the sale of goods in Northern Ireland sold to customers in Northern Ireland.
These rules will also not apply to consignments of goods from Jersey and Guernsey, if VAT is collected and paid to HMRC under the Import VAT Accounting Scheme.
What an online marketplace is
HMRC’s definition of an online marketplace is a business using a website or mobile phone app (such as a marketplace, platform or portal) to handle the sale of goods to customers which meets all of the following conditions:
- in any way sets the terms and conditions on how goods are supplied to the customer
- is involved in any way in authorising or facilitating customers’ payments
- is involved in the ordering or delivery of the goods
A business will not be classed as an online marketplace if it only provides one of the following services:
- processing of payments for the supply of the goods to the customer
- listing or advertisement of goods
- redirection or transferring of customers to other websites or mobile phone apps where goods are offered for sale, without any further involvement in any sale that might take place on that website or app
Goods that are outside of the UK at the point of sale
The online marketplace must work out the consignment value of the goods by deciding their ‘intrinsic value’, this is the price the goods were sold for, not including:
- any transport or insurance costs, unless they are included in the price and not separately shown on the invoice
- any other identifiable taxes and charges
Unless sent individually, the seller must add the individual values of all items in a consignment together to get the total value of the consignment.
If the seller makes changes to the value of the consignment so that its total value goes above £135 they may be liable for import VAT and Customs Duty, and have to adjust the VAT already accounted for at the point of sale.
Low value consignment relief (LVCR), which is an import VAT exemption for goods valued at £15 or less, has been removed in:
- Great Britain for goods imported from outside the UK
- Northern Ireland for goods ordered remotely that are imported from outside the UK and EU
Consignments valued at £135 or less
The online marketplace must charge and account for VAT at the point of sale, unless the consignment is a business to business sale and the customer has given their UK VAT registration number.
To charge and account for VAT the online marketplace will need to:
- know the precise nature of the goods to find out the correct rate of VAT to charge
- register for VAT – online marketplaces that are already registered for VAT do not need to re-register
- keep records of the goods sold, and make sure they get accurate information to apply the correct VAT treatment to the goods
The online marketplace will be held liable for under-declared VAT if they cannot show they have taken reasonable steps to make sure the correct VAT was charged.
Business to business sales to UK VAT-registered customers
The online marketplace will not need to charge and account for VAT if the customer gives them their VAT registration number. The online marketplace can confirm it’s correct using the online service.
The online marketplace can add a note to the invoice (for example, by writing ‘reverse charge: customer to account for VAT to HMRC’) then send it to the UK business customer.
The business customer will then be responsible for accounting for any VAT due on their VAT Return if the goods are supplied in:
- Great Britain, using a ‘reverse charge’ procedure
- Northern Ireland, using postponed VAT accounting
In both cases, the business customer will be able to recover the VAT as input tax on the same VAT Return under normal VAT recovery rules.
Consignments valued at more than £135
Normal VAT and customs rules will apply on importation of the goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU.
Find out more about how imported goods are treated for VAT purposes:
- paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland
- check how to get your import VAT certificate (C79)
- get your postponed import VAT statement
- Notice 252: valuation of imported goods for customs purposes, VAT and trade statistics
Goods that are in the UK at the point of sale
Importing goods to sell through online marketplaces
The overseas seller will remain liable for any import VAT and Customs Duty when the goods are first imported into the UK.
When the goods are sold to the customer, the overseas seller will be considered to have made a zero-rated supply of the goods to the online marketplace, known as a ‘deemed supply’. The overseas seller does not have to issue invoices to the online marketplace for deemed supplies that are considered to be zero-rated.
UK VAT will be charged at the point of sale.
The online marketplace will be liable to account for the VAT on the sales made through its marketplace, unless the goods are for a business customer who gives them their UK VAT registration number.
Overseas sellers who only make zero-rated deemed supplies can either:
Overseas sellers who are registered for VAT, can reclaim any import VAT they had to account for when the goods were first imported into the UK. The normal rules about what VAT can be reclaimed as input tax will apply. Find further information about input tax in VAT Notice 700.
Goods in the UK at the point of sale going to Northern Ireland
The online marketplace will not be liable for VAT on the sale of goods that are in Northern Ireland at the point of sale and sold to customers in Northern Ireland. The seller must register for VAT if they are not already registered. They will be liable to account for the VAT on the sale. The online marketplace must carry out VAT checks on overseas sellers.
Goods sold to UK VAT-registered businesses
The online marketplace should pass on all the details of the sale (which should include the VAT registration number of the business) to the seller on the marketplace. The seller must register for VAT if they are not already registered. They will be liable to account for the VAT on the sale. The online marketplace must carry out VAT checks on overseas sellers
If the goods are in Northern Ireland at the point of sale being sold to customers in Northern Ireland then the online marketplace does not need to pass on the details of the sale. The online marketplace must carry out VAT checks on overseas sellers.
The normal rules for the content and format of VAT invoices will apply.
The online marketplace should issue a full paper or digital invoice for goods.
For goods sold in Northern Ireland from outside of the EU, the online marketplace does not need to provide a VAT invoice.
The online marketplace must keep full records (including VAT invoices) for 6 years from the date any goods are sold.
Find out more about VAT record keeping.
VAT and goods returned to you
Read the VAT and overseas goods sent to the UK and returned to the seller guidance to find out how to deal with VAT if you have sold goods sent from abroad to customers in the UK and they are returned to you.
Goods sold before 1 January 2021
If the online marketplace received payment for an order before 11pm on 31 December 2020 and dispatched the item after that time, these rules would not apply.