VAT treatment of overseas goods have changed

From 1st January 2021, HMRC introduced a new model for the VAT treatment of goods arriving into Great Britain from overseas. This is intended to ensure that goods originating in the UK, EU and non-EU countries are treated in the same way.

The new regulations require overseas vendors to collect VAT on all orders that do not exceed £135, and to pay this to HMRC. Orders that have a value that exceeds £135 are processed in the same way as previously.

As an overseas vendor, we are now required to register for a VAT number with HMRC, file VAT returns, and make payments via Direct Debit to HMRC from a UK bank account. As a company that is registered in the USA this essentially requires us to create a new operating company in the UK, as:

  • HMRC provides no mechanism for a US bank account holder to settle VAT returns directly (as Direct Debit is a UK specific service)
  • We will need to set up a UK bank account, which typically requires us to be a business registered in the UK

    Our new $200 minimum order value

    Unfortunately, as a small company in a niche market we simply do not have the resources to manage this new regulatory burden and the  administrative overhead that it introduces. Hiring additional resource to manage  this new requirement is not a viable option due to the small size of the UK market in proportion to the rest of our business.

    Rather than refuse sales to residents of the UK entirely, by shipping only orders with a value of more than £135 we are able to avoid the VAT collection and filing requirement.

    As long as this trade barrier remains in place, all orders that are shipping to the UK must have a value of at least $200 before shipping costs, so that they may be processed under the standard WTO rules (as previously).

    We are aware that $200 is a little higher than £135, but with fluctuating currency conversion rates this gives us a little wiggle room to play with rather than have to adjust the threshold on a constant basis - as our eCommerce platform is unable to to apply a block on order values for any currency other than USD.

    As has always been the case, our goods are sold without including sales tax and. Please be aware that you should expect to pay VAT, duty and a customs processing fee before you may take receipt of your shipment.

    We appreciate your continued support, patience, and understanding in this matter.

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