12-14-2020, 07:01 PM
#1
  • bullgoose
  • The Enabler
  • Redondo Beach, California, U.S.A
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I really did not think that Brexit would impact me but, it apparently does. I have received emails and notifications over the past few days that we will have to start collecting VAT from our UK customers. In addition to being a PITA, this puts us at a competitive disadvantage since UK shops do not charge U.S. residents sales tax. 

See below:

Hi Phil,

Starting January 1, 2021, businesses selling to and from the UK will be subject to new regulations, customs, and duties because of the UK’s exit from the EU. Make sure BullGoose Shaving complies with the new laws to avoid products getting delayed at customs, unhappy customers, and potential fines.

Here are a few things you need to consider if you are selling to the UK:
  • Register for UK VAT: You will need to register for UK VAT and collect VAT on orders below £135. If you are unsure how VAT rules impact your business, contact HM Revenue & Customs or a local tax professional.
  • Update tax settings in Shopify: To start collecting VAT in the UK, you’ll have to add your tax information in Shopify.
    • Add VAT registration for UK

  • Apply for EORI: You should apply for an Economic Registration and Identification (EORI) number if you don’t have one already. This unique ID code is used to identify your business in customs documents. Get your EORI number by registering with HM Revenue and Customs (HMRC).
  • Review customs documentation: You may have to provide necessary customs documentation to avoid delays and make sure your customers get their orders on time. Customs documents may include your EORI number, VAT amount collected on shipment, VAT registration ID, and other details like harmonized system (HS) code, product description, country of origin, and value of each product in the shipment. For more information, work with your shipping carriers to understand what additional documents are required while shipping to the UK or the EU.


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 12-15-2020, 09:46 AM
#2
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Phil, I've raised this issue on our UK forum, Against the Grain. It would be worth looking in to as a member is saying this is not mandatory. I'm sure our Revenue & Customs would love others to do their work for them, though.

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 12-15-2020, 11:39 AM
#3
  • bullgoose
  • The Enabler
  • Redondo Beach, California, U.S.A
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(12-15-2020, 09:46 AM)Optometrist Wrote: Phil, I've raised this issue on our UK forum, Against the Grain. It would be worth looking in to as a member is saying this is not mandatory. I'm sure our Revenue & Customs would love others to do their work for them, though.

Thank you for raising the issue on Against The Grain. I certainly hope that it is not mandatory. Retroactively entering Harmonized codes for each product and keeping track of and paying the VAT taxes would create a lot of extra work. I will also ask my accountant about this.

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 12-16-2020, 09:36 AM
#4
  • Mr_Smartepants
  • Senior Member
  • Cambridgeshire, UK (CONUS post address)
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I'm not an accountant, but I don't think VAT is collected at point-of-sale outside the UK because the customs folks collect import duty and VAT when the package arrives at the UK border.

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 12-18-2020, 04:25 AM
#5
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The bill received Royal Assent yesterday so is now law, which will apply from 1st Jan 2021. Not sure if they are working on some new system to verify if sales tax/VAT has been applied to goods under £135 GBP. If not then all they have done raise the import threshold to £135 GBP.

In normal times this law probably would have received some scrutiny. Requiring the retailer to collect VAT would be a good idea if the UK Government had any jurisdiction outside the UK. I can't see why any retailer would comply with this.

Best regards, Paul.

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 12-18-2020, 07:44 AM
#6
  • Rufus
  • Senior Member
  • Greater Toronto Area
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(12-16-2020, 09:36 AM)Mr_Smartepants Wrote: I'm not an accountant, but I don't think VAT is collected at point-of-sale outside the UK because the customs folks collect import duty and VAT when the package arrives at the UK border.

Certain retail vendors in the USA (eg Lands’ End and LL Bean) exporting to Canada collect applicable Canadian duties and taxes on sales to Canadian residents and remit to the Canadian government.  The purchaser in Canada does not pay a fee, per se, for this.  Lands’ End ships via UPS or the post office and LL Bean uses BorderFree.  I purchase regularly from both these firms and it is as simple and convenient as buying on-line from a domestic vendor.  Moreover, both vendors price their Canadian sales in Canadian $.

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 12-18-2020, 08:05 AM
#7
  • bullgoose
  • The Enabler
  • Redondo Beach, California, U.S.A
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(12-18-2020, 04:25 AM)Suffolksupplies Wrote: The bill received Royal Assent yesterday so is now law, which will apply from 1st Jan 2021. Not sure if they are working on some new system to verify if sales tax/VAT has been applied to goods under £135 GBP. If not then all they have done raise the import threshold to £135 GBP.

In normal times this law probably would have received some scrutiny. Requiring the retailer to collect VAT would be a good idea if the UK Government had any jurisdiction outside the UK. I can't see why any retailer would comply with this.

Best regards, Paul.

It does seem like a crazy request. The email warns of potential fines but I have no idea what entity would have the authority to fine the retailer.

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 12-18-2020, 09:57 AM
#8
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The EU are asking the same from July 2021. However they explicitly state that their IOSS scheme is voluntary. In effect the UK scheme is also voluntary as they have no way to sanction non compliance & no way to check even a small % of goods that travel by mail or by DHL etc.

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 12-18-2020, 10:45 AM
#9
  • bullgoose
  • The Enabler
  • Redondo Beach, California, U.S.A
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Thank you for the insight Paul. I appreciate it!

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