And if those companies don't register for VAT with the HMRC (and do returns, remit funds, etc.) what can and will HMRC do?you are still paying UK VAT for goods bought from overseas sellers even when it's under £135. See the explanation below.
This is the legal position from 1-January:
For most consignments not exceeding £135 in value, instead of VAT being collected at importation or delivery to the customer, VAT will be accounted for at the point of sale.
For VAT purposes the supply will be treated as follows:
In both instances the value of the goods for VAT purposes will be based on the price at which they are sold to the consumer rather than any valuation calculated at the point of importation.
- if an OMP is not involved in facilitating the sale, there will be a supply direct from the seller to the consumer, which will be deemed to take place in the UK and so liable to UK VAT
- if an OMP is involved in facilitating the sale, they will be deemed, for VAT purposes, to be making the supply to the UK consumer, which will be deemed to take place in the UK with UK VAT chargeable accordingly
For goods that are located overseas at the point of sale, the new arrangements will apply irrespective of where the OMP or the business selling the goods is established.
This means that the following types of businesses will have to register for UK VAT (if not already registered) and account for VAT to HMRC:
Businesses established outside the UK and selling goods to UK customers where the goods are already in the UK at the point of sale are liable for UK VAT on those sales under existing rules. Such businesses should already be VAT registered.
- any business that operates an OMP that facilitates sales of goods to UK customers
- any business that sells goods directly (without OMP involvement) to UK customers where the goods are (a) outside UK at the point of sale (b) imported to the UK in consignments not exceeding £135 in value
Can you see HMRC chasing companies across the world for failing to register and collect VAT? Indeed, it might even be illegal for some to do so under their own laws. (Acting as an agent of a foreign government - even just for collecting VAT - might well end up in supreme courts.)
I can't see the consumer being chased - unless HMRC try to ban all personal imports unless VAT has been demonstrated to have been collected.
We seem to be in a worse place than we were before brexit. At least then, UK vendors were charging UK VAT on goods sent to EU countries - as some sort of balance to goods going the other way. Now HMRC don't get anything in many cases.