Online sales in the UK have reached almost $100 billion in 2020. As the fourth-largest market globally, the UK offers an attractive market for expanding e-commerce businesses. Staying VAT compliant is important if you intend to sell to UK customers.
Here are some top tips for selling to UK customers regarding VAT
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Know where you will be required to pay VAT
If your business intends to import goods into the United Kingdom, you may be required to register for VAT depending on the value of the consignments. You must be aware of when and at what rate VAT should be charged in order to comply with the law.
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Make sure your pricing strategy is accurate
VAT is usually set at 20% across the UK, so you may need to consider your pricing to protect your profit margins. To remain compliant, ensure that you stay up-to-date via HMRC regarding the most recent UK VAT rates.
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Get an EORI number
As an importer, you are required to obtain an EORI number in order to clear customs. If you are interested in selling into the UK, UK-Accountant can assist you in registering for this service and setting you up for success.
Are you subject to VAT obligations?
When selling to UK customers, it is important to be aware of your VAT obligations. Depending on where your goods are based at the point of sale, your obligations may vary.
Selling into the UK
Goods outside the UK at Point of Sale (Non-UK businesses)
In order to sell online to customers in the UK with a consignment value of under £135, you will be required to register for VAT from the time of your first sale. Sales with a consignment value of less than £135 will be subject to VAT at the point of sale.
If you are selling on a marketplace to UK consumers in consignments of less than £135, and the goods are outside of the UK at the time of the sale, the marketplace (Amazon, Ebay and others) will be responsible for charging and collecting the UK VAT to the customer on your behalf.
In the case of consignments valued at more than £135, you have the option of choosing either yourself or the customer as the importer of record for the sale. Generally, if you are the importer, you must be VAT registered, charge VAT at the point of sale, pay import VAT, and reclaim it on your VAT return.
All sales to UK customers must be subject to the UK VAT rate applicable to your products.
Selling within the UK
Goods inside the UK at Point of Sale (Non-UK Businesses)
The supply of goods within the UK to be sold onwards to customers constitutes a taxable supply and requires VAT registration. All sales to UK customers must be subject to VAT. If you have paid import VAT, you can claim it on your VAT return (excluding businesses that are subject to the Flat Rate Scheme).
Sellers are required to charge the UK VAT rate applicable to their products when making sales to customers in the UK.
Out experienced VAT Team at UK-Accountant will be happy to respond to all your queries. Get in touch with us now.
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