VATREG37210 - Non-established taxable persons (NETPs): overseas sellers and online marketplaces

Goods sold directly to non-business customers

Section 7 of the VAT Act 1994 provides that goods sent to UK in consignments valued up to £135, which would normally be treated as supplied outside the UK, are treated as supplied in the UK. These goods are subject to domestic supply VAT and import VAT is not chargeable on those goods. The overseas seller must charge UK VAT at the point of sale and register for VAT in the UK unless the supply is an exempt supply.

Overseas sellers importing consignments containing goods subject to excise duty or valued over £135 remain subject to normal import VAT rules. The recipient of the goods usually pays the import VAT and customs duty.

Note: Goods of any value imported by overseas sellers from outside the EU into Northern Ireland remain subject to import VAT. Goods supplied from an EU VAT-registered business directly to a non-business customer in NI are subject to distance sales rules. Where the VAT on low value imports into Northern Ireland is accounted for under the Import One Stop Shop scheme, the supply disregarded for the purposes of determining a liability to register under Schedule 1A of the VAT Act.

Goods sold using online marketplaces

Section 5A of the VAT Act contains the legal provisions governing the supply of goods sold through online marketplaces. These came into effect from 1 January 2021.

Goods sold by overseas businesses to non-business customers using an online marketplace are not considered taxable supplies for the purposes of registering under Schedule 1A if all the following apply:

  • the goods are outside the UK at point of sale
  • the value of the consignment is not more than £135
  • the consignment does not contain goods subject to excise duty.

The goods are not subject to import VAT and the online marketplace is deemed to have made the supply to the non-business customer. The deemed supply between the overseas seller and online marketplace is not considered within the scope of UK VAT.  

If the goods sold via the online marketplace are located in the UK at point of sale, or the other conditions listed above are not met, a liability to register under Schedule 1A will arise as normal. However, the overseas seller can request exemption from registration as the supply to the online marketplace is deemed zero-rated.

The online marketplace will have a liability to register in respect of the deemed taxable supplies to the UK non-business customer.