BREXIT: Shipment of goods with a value in excess of GBP 135 after Jan 1st 2021

Brexit transition period comes to an end.

Brexit is now really going to happen. On December 31, 2020, the transition period will end and by January 1, 2021, Great Britain (GB) will also leave the regulations of the European Union (EU) and GB will no longer form part of the VAT and customs territory of the EU. This has the necessary consequences for EU entrepreneurs. In this series of articles we will explain the most important developments from a VAT and customs perspective.

What should be taken into account in the context of the applicable regulations?

It is important to note that in terms of goods regulation, GB is leaving the EU, not the UK. The UK is formally called The United Kingdom of Great Britain and Northern Ireland. It is precisely the last area, Northern Ireland (NI), to remain behind in the EU for a while when it comes to at least the supply of goods.

Shipments to the UK from January 1, 2021.

With effect from 1 January 2021, shipments to the UK will no longer count as intra-Community deliveries. The delivery is therefore not included in the ICP declaration, nor in the outgoing Intrastat declaration. Instead, there are imports into the UK and exports from the EU. Customs formalities are therefore also involved in both situations. The impact of the UK supply from a VAT perspective depends on the status of the UK buyer of the goods and the value of the shipment.

Shipment of Goods Over GBP 135 Value

In the case of shipments of goods with a value in excess of GBP 135, the UK buyer will in principle be regarded as the importer. Import VAT applies at the UK border and is borne by the UK buyer. The VAT registered importers in the UK have to justify the import VAT on their periodic VAT returns using a VAT reverse charge mechanism.

Importers not registered for VAT must declare and pay import VAT as part of the customs processes. They can possibly use a so-called Duty Deferment Account (DDA) with which VAT and import duties can be paid monthly instead of direct payment during the import declaration.

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