Fellow modellers,

It is with heavy heart that I have decided, effective immediately, to halt all sales to customers in the United Kingdom.

I have taken this rather drastic decision as a direct consequence of the implementation of a requirement by Her Majesty's Revenue & Customs that if I make even one sale for $1, I must register with HMRC, collect 20% VAT, and file quarterly VAT returns.

If my UK customers would like to read up on this, see

https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat#non-established-taxable-persons-netps-basic-information

Under this law, I am considered a "NETP" (Non Established Taxable Person), and, according to section 8.3,

If you make any taxable supplies (see paragraph 2.3) in the UK, you must:

register for VAT in the UK
account for UK VAT to HMRC

The law requires that I include my VAT number on the electronic customs declaration, and if I do not, any package sent to a UK address can be returned or destroyed.

The UK is the ONLY country in the world that I am aware of that does not have a reasonable "minimum sales threshold". For a small one-person business such as AHS, the burden of collecting, accounting and filing such tax returns becomes unreasonable. Did you know in the U.S. there are over 11,000 taxing jurisdictions? Fortunately all U.S. states have set reasonable thresholds below which I am exempt. Australia also imposes a taxing requirement on offshore businesses, but with a minimum AU$ that I am never going to come close to meeting.

At such time as the UK takes steps to lessen this requirement, I will, of course, reconsider.

Thanks!

Hi Russell,

Thank you very much for this information. I was not aware of this until now. Can any one, probably from the UK, let us know how much this VAT is in percentage?

Kurt

I just found this information on the esellercafe website:

BREXIT is changing how the UK is managing VAT and now it has placed the burden of collecting VAT on small orders (those under £135 or about $180) on non-UK based merchants

I agree with Russell, this is ridiculous.

Mike

It's not really a case of the UK government waking up to anything. This scheme was dreamt up by the EU to counter large-scale VAT evasion. The UK have started it early because we left the EU customs union on 31 December and it was presumably deemed "sensible" to make the change along with everything else from 1 January.

The scheme or something very like it is going to be rolled out across the whole EU in the summer, I think in July.

It is disappointing that Russell and other sellers have pulled the plug completely on UK sales rather than setting a minimum UK sale limit of £135/€150 or USD equivalent. Over that level the current procedure remains in force - the seller completes a customs declaration and the UK Post Office collects what's due from the purchaser.

Hi David,

Is it true that I will not have to pay VAT for parcels with values above 150,00€? If yes, where can I find and verify this regulation?

Kurt

Well... 1:40 am here in Phoenix, and I just got off the phone with a very helpful lady at HMRC. There is good news and bad news.

First, she directed me to the following HMRC VAT Bulletin:

https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk

It would appear that orders valued at £135 or more before postage are exempt from the seller having to collect VAT. It is orders under £135 before postage and insurance that the seller (i.e. AHS) must, effective Jan 1st 2021, register for and collect 20% VAT, then file quarterly VAT returns with HMRC.

As I said previously, the workload impact is simply not worth the time I will have to spend complying with these regulations.

However, I am willing to work within the regulations.... so the good news is that I will accept orders from the U.K. that are $200 or more, before shipping (£135 at current exchange rate is $184, so rounding up to allow for currency exchange fluctuations).

The bad news is that my estore has no ability to enforce a minimum order only to customers in certain countries. I can set a store wide minimum, but not by country.

To draw attention to this, the shipping countries for the UK have been changed to “BREXIT – ENGLAND”, “BREXIT – NORTHERN IRELAND”, “BREXIT – SCOTLAND” and “BREXIT – WALES”. No worries, I manually create shipping labels, “BREXIT” will not appear on them!

Finally, and obviously, orders from customers in the U.K. and under $200 will be cancelled, and I will communicate with the customer via email explaining the issue.
Thanks to all here, and on AMD who have posted comments that have helped me figure this out.

This is insane!!!

Problem here is two countries/citizens doing business and the government taxing. Big difference from taxation without representation issue.

Sad that the UK has "ramped up" collection of VAT but what are you going to do?

I'm Scottish by birth but have lived in the US for most of my life so think I have a little more knowledge on the US/UK culture differences and similarities. I've always thought VAT was high compared to US taxes. A personal peeve is the required UK license/tax for TV and mobile phones. I would think people in the UK would vote it away but it hasn't happened yet.

Ken


quote]Jennings :
It seems to me that we settled this whole “taxation without representation” thing with the UK when, in 1783, General Washington opened up a big fat can of genuine Yankee whoop a** on Lord Cornwallis at a little place called Yorktown. Her Imperial Majesty can kiss my Yankee butt.

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