New Customs Regulations for the UK

[worldwidewicket]

eBay wrote to sellers some time ago saying ....

• From 1 January 2021, eBay will collect and remit VAT on consignments up to a value of £135 imported into the UK and sold to consumers.

I just sold an item 5 minutes ago to a customer in the UK for approx 50.00 and ebay has not collected the VAT.

Does anyone know how this new system is going to work? eBay's letter was a bit vague ie If a seller sends something to the UK how will customs know if the VAT has been collected or not?

[worldwidewicket]

Thanks to everyone for their comments. Just a heads up for sellers. I just made another sale to the UK and eBay has added the VAT to the total including postage. The customer is upset and can't understand how postage could also attract VAT so I will just let him cancel the sale.

I think there are going to be a lot of customers who dont understand the new regulations and I think the only option is not to sell to Europe and the UK. Its just not worth the hassle.

[digital*ghost]

Again, same as our system.

For us, if the goods are valued under $1k, then eBay adds GST to the entire price, including any shipping. That means for us, if the item is $999 and shipping is $100, eBay adds and collects the GST. If it's $1001 and $5 postage, eBay won't add the GST, but customs will, assuming the value has been declared correctly. 

Ditto for the UK, just the thresholds are different - if the goods are under that £135 threshold, then it's a taxable supply, and tax is applied to the entire amount. It doesn't matter if shipping is charged separately, it's a single contract for the supply of goods, and they are supplied as a single taxable good. 

Delivery charges are a bit funny in the UK, though, so that might cause some confusion for a while - Royal Mail don't include VAT in their pricing of services, so maybe there is an expectation shipping is a VAT-free service. For delivery of purchases over there, VAT is also only applied to the delivery charges of a purchase if the goods are a taxable supply (that would be like GST only apply to postage if the product being sent also included GST, but everything would be GST free if the product was). 

[worldwidewicket]

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@digital*ghost wrote:

Delivery charges are a bit funny in the UK, though, so that might cause some confusion for a while - Royal Mail don't include VAT in their pricing of services, so maybe there is an expectation shipping is a VAT-free service.

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Yes, customers wont understand the new system and will be annoyed that the VAT applies to shipping. Just reinforces the fact that it is not worth shipping to the UK.