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Selling into the UK Post-Brexit: A VAT Survival Guide for Cross-Border eCommerce Sellers

post brexit ecommerce sellers vat

The UK continues to be one of the top destinations for global eCommerce. However, selling into the UK after Brexit now involves stricter VAT requirements, particularly for overseas sellers. If you’re shipping products from outside the UK or storing goods in the country, VAT compliance is not optional—it’s critical. This guide helps cross-border eCommerce businesses understand VAT registration, accounting, import rules, available reliefs, and how to stay compliant with HMRC.

UK VAT Registration: What Cross-Border Sellers Must Know

For overseas sellers, VAT registration in the UK is not based on the usual domestic threshold (£90,000). Instead, even a single sale to a UK consumer may trigger a VAT obligation.

You must register for UK VAT if any of the following apply:

  • You sell goods to UK consumers (B2C) from outside the UK.
  • You store goods in the UK (e.g., Amazon FBA, third-party warehouse).
  • You ship orders from abroad directly to UK buyers, even if only occasionally.
  • Your UK sales are not purely B2B, or you don’t collect valid UK VAT numbers from business buyers.
  • You plan to maintain consistent stock movement into or within the UK.

Only if the consignment value is £135 or less and you’re making exclusive B2B sales (with UK VAT numbers properly validated) or sale to unregistered business/customer via Online Market Place, you may be able to avoid registration. Otherwise, plan for VAT from your very first sale.

Accounting for UK VAT Once Registered

After registering for VAT, sellers must account for VAT on their UK sales. This includes charging the correct rate, collecting VAT from customers, and remitting it to HMRC.

UK VAT rates include:

  • Standard rate: 20%
  • Reduced rate: 5% (e.g., energy-saving materials, children’s car seats)
  • Zero rate: 0% (e.g., books, children’s clothing, most food)

You must issue VAT invoices for B2B sales, report VAT in quarterly returns, and store records in a Making Tax Digital (MTD)-compliant format using approved accounting software. If eligible, input VAT on business expenses—such as shipping, platforms, and storage—can be reclaimed, helping reduce your VAT bill.

Import VAT and the Postponed VAT Accounting (PVA) Scheme

Since the end of Low Value Consignment Relief, all goods imported to Great Britain face VAT—even low-cost items. The solution for VAT-registered sellers is Postponed VAT Accounting (PVA).

PVA allows you to account for import VAT in your VAT return, rather than paying it at the border. This improves cash flow significantly, especially for sellers importing regularly.

To use PVA:

  • Provide your UK VAT number to your courier, customs agent, or fulfillment partner.
  • They will apply PVA by default unless you request otherwise.
  • Download your monthly PVA statement from HMRC’s Customs Declaration Service (CDS).
  • Enter import VAT in your VAT return (Box 1 = output VAT, Box 4 = input VAT).

PVA ensures that import VAT does not become a short-term financial burden, keeping your cash flow healthy.

Special Reliefs and Schemes: What Still Applies After Brexit

Several VAT simplifications have changed post-Brexit. Below are key reliefs and schemes you should be aware of:

Low-Value Consignment Relief (LVCR)

Abolished. All imports to Great Britain are subject to VAT, regardless of value.

UK Freeports

Some areas offer VAT suspension for goods entering special customs zones. Requires pre-approval and applies to specific use cases.

Returned Goods Relief

If you temporarily export goods and re-import them (e.g., after repair), you may not owe VAT on re-entry—subject to specific time limits and conditions.

EU and Northern Ireland Sales

Special rules apply when selling into the EU or Northern Ireland. Use OSS/IOSS for EU B2C sales. Northern Ireland still follows EU VAT rules on goods.

Flat Rate Scheme (FRS)

Simplified VAT accounting is available for UK businesses, but marketplace sales are excluded from the flat rate calculation. Refer to HMRC Notice 733 for FRS usage post-Brexit.

These schemes may offer strategic tax savings or simplification—but only if you’re eligible and understand the conditions.

VAT Invoicing and Digital Record-Keeping

UK VAT law requires all taxable transactions to be properly documented. For B2B sales, VAT invoices must include business names, VAT numbers, the invoice date, the amount of VAT charged, and the total price. For B2C sales, especially via marketplaces, detailed receipts or sales reports that include VAT amounts should be kept.

VAT Invoicing and Digital Record-Keeping - uk post-brexit

 All data must be stored digitally, as required by Making Tax Digital (MTD). Approved software such as Xero, QuickBooks, Sage, or MTD-compatible spreadsheets must be used for filing VAT returns.

Maintaining clear records of sales, VAT charged, imports, and expenses not only ensures compliance but also protects your business in case of an audit.

Penalties and Marketplace Enforcement

Non-compliance with UK VAT rules can lead to serious consequences:

  • Financial penalties and interest from HMRC
  • Suspension or ban from online marketplaces (e.g., Amazon, eBay, Etsy)
  • Possible backdated tax demands if sales were made without proper VAT registration

Since Brexit, HMRC has stepped up enforcement—especially for cross-border sellers. Marketplaces are now obligated to report non-compliant sellers, and some may block your listings if a VAT number is not provided.

To avoid issues, always check if VAT applies, keep registration up to date, and consult a VAT adviser if unsure.

Conclusion: Building a Compliant Cross-Border Business in the UK

Selling into the UK remains a profitable move for global eCommerce brands, but VAT compliance must be taken seriously. From registering early to using postponed VAT accounting, keeping digital records, and leveraging applicable reliefs, sellers must now take a proactive approach. The rules may be stricter, but with the right systems in place, you can stay compliant, protect your profits, and build long-term success in one of Europe’s most mature eCommerce markets.

Prasun Shrestha is a specialist in accounting and taxation and has served numerous clients based inside and outside UK achieve regulatory compliance and optimal performance.