VAT on goods crossing borders

The UK is no longer treated as an EU country since the Brexit transition period ended on 31 December 2020. This has some significant implications for VAT and duties on international transactions.

All imports of goods into Great Britain (different rules apply for imports into Northern Ireland) are subject to VAT, customs duty and customs declarations at the point of entry. These taxes and duties must normally be paid before the goods can be released from the port.

Payment of the import VAT may be deferred if the buyer has a VAT deferment account or has been granted access to “Postponed VAT Accounting”. This allows the importer to account for the VAT on their next VAT return. However, to use Postponed VAT Accounting, you must have an EORI number and register for HMRC’s Customs Declaration Service (CDS).

Customs declarations are complicated and must be correct. An experienced customs agent or freight forwarding company may be needed to complete this process (for a fee!).

Any goods that leave Great Britain are zero-rated for VAT purposes and will be subject to duty and VAT when they arrive in the destination country. Proof of export must be retained to support the zero-rating.

If you buy low value goods from overseas suppliers (not exceeding £135) you will need to account for VAT on your own VAT return by doing a reverse charge entry. If your business is not VAT registered, you will get a VAT invoice from the overseas seller, who is obliged to register for UK VAT.

Where you trade in goods that move between Great Britain and Northern Ireland, you should register for the free Trader Support Service (TSS), which can advise and help with the necessary paperwork that will be needed.

Action Point!
Apply for your EOIR number and register for the CDS before exporting goods.