View the related Tax Guidance about Imports
Imports ― overview
Imports ― overviewThis guidance provides an overview of VAT and imports of goods into the UK.For information about the VAT rules in each EU country, please refer to the VAT in the EU guidance note.In-depth commentary on the legislation and case law on imports of goods can be found in De Voil Indirect Tax Service V3.301.What are the main VAT considerations when importing goods?There are a number of key VAT areas to consider when importing goods. The table below summarises many of these, and also links to more detailed guidance on each of these subjects:Area to considerDescriptionGuidancePlace of supply of goodsFor VAT purposes, it is very important to consider the ‘place of supply’ of a transaction, as only supplies made in the UK are subject to UK VAT (although note that import VAT can still be due in respect of non-UK supplies)Place of supply of goodsMeaning of importA business needs to know whether something is an import for VAT purposes or notImports ― meaning of import and VAT on importsImport VATIt will often be necessary to determine whether import VAT is due on goods brought into the UKImports ― meaning of import and VAT on importsPostponed accountingMost VAT-registered
VAT liability ― overview
VAT liability ― overviewThis guidance note provides an overview of the concept of VAT liability along with links to further practical guidance on the subject.In-depth commentary on the legislation and case law associated with VAT liability is covered in:•De Voil Indirect Tax Service V4.1 ― VAT exemption•De Voil Indirect Tax Service V4.2 ― the zero rate of VAT•De Voil Indirect Tax Service V4.4 ― the reduced rate of VATIntroduction to liabilitySupplies of goods and services which are made by taxable persons in the course of their UK business activities can be subject to one of four VAT liability treatments:•standard-rated•reduced-rated•zero-rated•exemptStandard, reduced and zero-rated supplies are often referred to collectively as ‘taxable supplies’. This distinguishes them from exempt supplies. The distinction between supplies that are taxable and supplies that are exempt is important because of its consequences for input tax recovery. VAT can generally be recovered on costs which are used to make taxable supplies. However, VAT cannot generally be recovered on costs which are used to make exempt supplies. This distinction is covered in greater detail in the Input tax ― overview and Partial exemption ― overview guidance notes. The reduced-rate, the zero-rate and exemption are sometimes referred to collectively as ‘VAT reliefs’. This is because VAT is either not chargeable on sales or is chargeable at a lower rate than the standard-rate. Despite being a ‘relief’, exemption will not necessarily be a more desirable treatment than the standard-rate because of its impact
Time of supply ― tax points in special circumstances
Time of supply ― tax points in special circumstancesThe nature of the supply can affect how the time of supply is determined. For example, there is no basic tax point for continuous supplies of services. The table below provides examples of supplies, the nature of which may affect the tax point. For detailed commentary on the tax point rules, see De Voil Indirect Tax Service V3.131 to V3.143.CircumstancesGuidanceBarristers and advocatesBarristersBuilding workLand and buildings ― building work ― invoices and authenticated receiptsCoin operated machinesVATTOS9050Continuous supplies of servicesTime of supply ― continuous supplies of
Liability ― freight transport and related services
Liability ― freight transport and related servicesThis guidance note looks at the scope of VAT relief for UK supplies of freight transport and related services. It also looks at VAT relief for intermediary services connected with these kinds of supplies.For the place of supply of freight transport and related services, see the Place of supply of services ― freight transport and related services guidance note.For an overview of liability generally, see the Liability - overview guidance note.For in-depth commentary on the legislation and case law on the liability of freight transports and related services, see De Voil Indirect Tax Service V4.251.Freight transport and related services - the basicsTo the extent that freight transport takes place entirely within the UK VAT relief is not normally available and the liability of supplies will be standard-rated.However, freight transport services can be zero-rated where goods are transported from the UK to another country or vice versa. As well as applying to the transport itself, the zero-rate of VAT can apply to some ‘related’ services and to various intermediary services connected with freight transport. Due to the international nature of many freight transport services, place of supply considerations will also frequently be important to those operating in the sector. Obligations in other countries will need to be borne in mind as a resut. Such rules will not necessarily mirror UK provisions. Scope of zero-rating for freight transport servicesThe transport of goods from within the UK to a place outside the UK is zero-rated to
Flat rate scheme (FRS) — operating the scheme
Flat rate scheme (FRS) - operating the schemeThis guidance note sets out how to operate the flat rate scheme (FRS). For an overview of the FRS more broadly, see the Flat rate scheme (FRS) - overview guidance note.See also De Voil Indirect Tax Service V2.199B and V2.199C.Operating the FRS - the basicsA business operating the flat rate scheme (FRS) must choose, from a prescribed list of sectors, the sector which most closely describes its type of business. A set ‘flat rate percentage’ is applicable to each sector.In simple terms, this flat rate percentage is applied to the VAT inclusive turnover of the business to calculate VAT due to HMRC for a period. This means that the business is not required to keep detailed input tax records to work out exactly how much VAT can be reclaimed on costs. Instead, a notional amount of VAT recovery is built into the flat rate percentage.For example, an accountant operating the FRS is likely to choose ‘accountancy or book-keeping’ as its type of business. The applicable flat rate percentage is 14.5%. If the accountant has a VAT inclusive turnover of £120,000, VAT due will be £17,400 (£120,000 x 14.5%).Various factors can complicate the basic operation of the FRS. For example, when choosing an appropriate sector there may be multiple possibilities or a business may have more than one kind of business activity. There are also special ‘limited cost trader’ rules which mean that businesses with low levels of costs must use a higher
Sector summary ― retail
Sector summary ― retailIntroduction to the sectorThe retail industry includes any businesses involved with selling products directly to consumers for use or consumption, rather than for resale. Traditionally, the retail sector encompassed shops, department stores and supermarkets. However, online retail is a prolific and growing segment of the market. This guidance note covers the key areas of consideration within VAT and indirect taxes for the retail sector. This guidance note acts as a useful starting point for advisers preparing for a meeting with a retail client, as well as in-house VAT teams.Key considerationsTopicOverviewCommon issuesLinks to further guidanceVAT liability of productsEnsuring that the correct VAT rate is applied to each product can be a significant challenge for retailers. Regular VAT liability reviews should be performed and product files updated to reflect any changes in the applicable VAT rate. This will be a particular focus for retailers selling:– food– pharmaceutical products (including contraceptives and smoking cessation products) – children’s clothes or safety equipment– books / magazines– women’s sanitary products– ensuring the correct VAT rate is applied to new products (it is not sufficient to rely on the VAT rate applied by the manufacturer) – monitoring changes to VAT rates – single vs multiple supplies. For example, applying the correct VAT rate to meal deals or products which are bundled (eg a free toy with a magazine)VAT rates applicable to goods and services ― overview; Single or multiple supplies ― overviewRetail
Imports ― special rules for consignments of £135 or less
Imports ― special rules for consignments of £135 or lessThis guidance note looks at the special rules that apply to imports of consignments valued at £135 or less which are located outside the UK at the point of sale.For importing goods from outside the UK generally, see the Imports ― overview (rules from 1 January 2021) guidance note. For movements of goods and Northern Ireland, see the Northern Ireland ― overview guidance note.In-depth commentary on the legislation and case law can be found in De Voil Indirect Tax Service V3.305.Imports of goods sold directly to GB customersWhere a consignment of £135 or less is sold directly to a customer in Great Britain and the goods are located outside the UK at the point of sale the place of supply for VAT purposes is deemed to be the UK. The effect of this is that overseas seller must normally register for UK VAT and account for VAT at the point of sale. However, where the supply is business to business and the customer has a valid UK VAT registration number, then a ‘reverse charge’ applies. This means that the overseas seller is not required to account for the UK VAT and instead the customer ‘self-accounts’ for the VAT due. The customer effectively treats the goods as supplied both to and by itself. This is a very similar mechanism to the reverse charge which applies to services bought in from overseas, for which see the Reverse charge ― buying in services
Economic Operator Registration and Identification Scheme (GB EORI)
Economic Operator Registration and Identification Scheme (GB EORI)This guidance note covers the GB EORI number. This is a unique number assigned by HMRC to businesses and individuals that import / export goods into or out of the UK. The GB EORI number should be used in all communications with HMRC where applicable.For information about the VAT rules in each EU country, please refer to the VAT in the EU guidance note.Who needs a GB EORI number?Any business that is involved in the import / export of goods to from Great Britain will need a GB EORI number. Persons who are not registered for VAT who import and / or export goods will still require a GB EORI number. Businesses only providing services do not require a GB EORI number. EU resident businesses that import or export goods into / out of the UK will require a GB EORI number, as an EU EORI number is not valid in the UK. A GB EORI number can only be issued to a legal person, which is:•a company•an individual•a partnership, or•a sole proprietorEXPP3060A GB EORI number cannot be allocated to individual branches or divisions within a legal entity. Only one number can be issued per legal entity. For GB EORI purposes, all members of a VAT group are treated as legal entities in their own right, but it is only group members who import or export commercial goods that will require a GB EORI number. The representative member
Cross-border VAT accounting schemes ― One Stop Shop (OSS) and Import One Stop Shop (IOSS)
Cross-border VAT accounting schemes ― One Stop Shop (OSS) and Import One Stop Shop (IOSS)This guidance provides an overview of the VAT accounting simplification schemes available to businesses who supply goods or services within the EU to non-taxable persons.For more detail on cross-border supplies, see the Exporting goods ― overview, Imports ― overview and International services ― overview guidance notes.Overview of the VAT accounting schemesIn order to simplify cross-border VAT accounting, VAT accounting schemes have been introduced across the EU which UK businesses are able to use in certain circumstances. These schemes aim to simplify VAT accounting within the EU and aid VAT compliance related to online sales to consumers. The schemes remove the requirement for businesses to VAT register in a number of jurisdictions where it otherwise might be necessary to do so. The schemes are the One Stop Shop (OSS) (which is made up of the Union OSS and Non-Union OSS) and the Import One Stop Shop (IOSS).The schemes are not mandatory, and businesses can choose to manage their VAT accounting obligations through alternative approaches; however, for the majority of businesses, the schemes offer a significant reduction in the VAT compliance burden associated with cross-border supplies to consumers. Further detail on when the schemes can be used and the benefits of the schemes are set out below.As it stands, the UK has not created any similar schemes for supplies from outside the UK to UK consumers. Therefore, typically, a non-UK established business selling to a UK market
Operating the margin scheme
Operating the margin scheme This guidance note provides an overview of how the margin scheme operates. Note that there are special rules in places when a margin scheme is used in respect of:•second-hand vehicles ― see the Margin scheme ― second-hand motor vehicles guidance note•horses and ponies ― see the Margin scheme ― horses and ponies guidance note•houseboats and caravans ― see the Margin Scheme ― houseboats and caravans guidance note•items that have been pawned ― see the Margin scheme ― agents and pawnbrokers guidance note•high volume, low price items ― in this instance the Global Accounting Scheme may be used, which is a simplified version of the VAT margin scheme - see the Global accounting margin scheme guidance noteVATA 1994, s 50A; De Voil Indirect Tax Service V3.531, V3.535; SI 1992/3222, Article 2; SI 1995/1268, Article 12; FA 1995, s 24; VATMARG02000There are also different rules:•for auctioneers ― see the Margin scheme ― auctioneers guidance note•for agents see the Margin scheme ― agents and pawnbrokers guidance note•if a business buys and sells goods in Northern Ireland and the EU ― see the Margin Scheme ― Northern Ireland and imports and exports guidance noteWhen a business wishes to use the margin scheme for any of the above categories, the relevant guidance note should be read in conjunction with this guidance note.Margin scheme ― what are margin schemes?Margin schemes are an optional VAT accounting methods that can be adopted by relevant businesses.
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