The British tax office has stepped up its scrutiny of VAT registration since last year. Since then, VAT registration in the UK has been very difficult. According to feedback from many sellers, the duration is as long as 3-6 months or even longer. The issue of UK VAT registration has consistently become a problem for many sellers going overseas. Some sellers opened FBA warehouses first, and the goods have been sent out, but the British VAT number has not yet been issued, causing the store to be closed.
In view of the above situation, we would like to remind everyone that UK VAT tax compliance must pay attention to the following points:
1. Under what circumstances will UK VAT obligations be triggered (Chinese sellers) ?
Use inventory in the UK (such as FBA warehouse or overseas warehouse). A UK VAT number needs to be uploaded within 90 days from the date of stocking in the UK, otherwise Amazon will suspend the UK account. If you can provide three supporting documents to Amazon, you will get an additional 30 days of grace period (90+30 in total, 120 days in total).
In the early stage of registering a VAT number in the UK, it is recommended to prepare basic application materials and supplementary materials at the same time:
Charging information that the British tax office may require includes but is not limited to: purchase invoices, transportation Contracts, Amazon Fulfillment (FBA) screenshots of goods delivery pages, storage information screenshots, sales reports, etc.
2. Start shipping after receiving the British VAT tax number and EORI number.
Do not open the UK FBA warehouse for delivery at will until the UK VAT number comes down (when the seller cannot ensure that the seller can download the number within the grace period). If the seller fails to upload the VAT number within 90+30 days from the date of inventory, the seller’s account will have sales permission suspended. It is recommended to plan in advance to apply for a British VAT number and start shipping after receiving the British VAT number (VAT) and EORI number.
3. Be sure to file tax returns in compliance with regulations.
UK Revenue imposes fines for late filings and tax payments respectively, which will lead to audit risks and result in store closures.
Note: Currently, the UK/EU Value Added Tax (VAT) implements a withholding and payment system. During the tax calculation process, there may be undeducted taxes, which need to be paid in time. If there is some additional tax or import VAT, you can also apply for a tax refund.
4. The British VAT penalty system in 2023.
From January 1, 2023, the British tax office HMRC will begin to implement new VAT overdue penalty rules. Any delay in filing a VAT return or delay in paying VAT will be subject to penalties and interest as per the new regulations.
5. Penalties for late submission of VAT returns.
According to the new regulations, in the VAT return cycle calculated after January 1, 2023, the British tax office will implement a points penalty system for enterprises and individuals who submit late VAT returns.
Different VAT reporting cycles will have different penalty threshold scores. Once the penalty threshold is reached, a fine of 200 pounds will be imposed. One more thing to remember is that if you are late once per day you will be fined £200 unless the fine is reset to zero.
6. Penalty for late payment of VAT.
For late payment of VAT, the applicable penalty rate depends on when the VAT is paid. In addition to the late payment penalty, late payment interest will also be incurred, calculated at the Bank of England base rate plus 2.5%. HMRC has also given a transition period from January 1, 2023 to December 31, 2023. During this period, if the taxpayer is within the first 30 days after the deadline.
In general, cross-border e-commerce sellers must do a good job in British VAT tax compliance, because it is becoming more and more difficult to obtain a British VAT number, so sellers should do a good job in British VAT taxation. Compliance, sellers must remember not to ship goods without receiving the British VAT tax number and EORI number, and must declare taxes in compliance, because there will be VAT penalties for late payment, so they must pay in time.