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 Collecting VAT at time of order US -> UK
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PhilipW
Starting Member

USA
29 Posts

Posted - 01/13/2021 :  08:53:46  
I'm in the US. I use Endicia to print my postage for orders. Yesterday I was notified by Endicia we have to begin collecting VAT on orders shipping to the UK. It's 20%, but it's only required on orders under about $180 in value. Orders higher than that do not need to have VAT collected by the seller.

I know how to put 20% tax on all UK orders, but I can't see a way to only do it on orders under $180.

Thoughts on that?

dbdave
ECT Moderator

USA
9016 Posts

Posted - 01/13/2021 :  09:58:43  
There was another post on this and I believe Vince may be working on something, but keep in mind that you must also register with the UK and get a tax id number and report quarterly taxes to them.

For this reason, I turned off all UK countries and we just will not ship there.
For us, it's a very small amount of orders, but I understand plenty of sellers will want to work this out.
I just personally think that this is an unfair burden on some sellers.

Thanks,
David

Vince
Administrator

39845 Posts

Posted - 01/13/2021 :  10:01:01  
Sorry about the delay but I am working on this as Dave says and I should have something ready by tomorrow.

Vince

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ekrzycki
Advanced Member

USA
328 Posts

Posted - 01/13/2021 :  10:19:03  
For those that are curious, essentially this is what Endicia said:

--------------------------------------------------------------------------------

Effective Jan 1, 2021, value added tax (VAT) must be collected for all goods entering the United Kingdom (UK).

There will be a 20% VAT rate on goods valued up to £135 (about $180 USD), which you must collect unless your online marketplace (e.g. eBay, Amazon, Etsy, etc.) is already collecting it. Current procedures for goods valued over £135 remain the same.

To prevent your UK shipments from being delayed, held, or returned by UK customs in 2021, please take the following steps:

1. Register for a VAT number with the UK: https://www.gov.uk/vat-registration
2. Collect VAT at the time of purchase.
3. Make quarterly VAT return payments to the UK.

-----------------------------------------------------------------------

Fortunately, I saw the other discussion in the forum and now have UK disabled until I can find time to conform to their rules. With two full time jobs taking all my time, unfortunately UK may not be an option for me any longer.

PhilipW
Starting Member

USA
29 Posts

Posted - 01/13/2021 :  10:37:13  
Thank you. Turning off the UK isn't something I can do unfortunately.

For those wanting to know more... part of the mess of this is the Endicia email was very short on details and somewhat misleading.

When you follow that link you are first shown that you don't have to do this if your sales to the UK are less than 85k pounds, rolling 12 months. I initially, stopped worrying right there because I am less.

From GOV.UK
When to register: You must register for VAT if your VAT taxable turnover goes over £85,000 (the ‘threshold’), or you know that it will. Your VAT taxable turnover is the total of everything sold that is not VAT exempt.

There's more detail, but that's essentially it.

However, IF you stop reading there you will miss this important detail on the same page:

Businesses outside the UK: There’s no threshold if neither you nor your business is based in the UK. You must register as soon as you supply any goods and services to the UK (or if you expect to in the next 30 days).

I got Endicia on the phone at after some effort they sent me a more helpful document. Here it is, sorry it's long:

Shipping to the UK after Brexit 2021
Starting January 1, 2021, shipping to the UK will be more complex due to Brexit. The UK has implemented new rules for goods imported into the UK. The biggest change is the requirement to collect VAT (Value Added Tax) on shipments to the UK.
The situation appears to be somewhat fluid. This is the current information we have available and will update it regularly as Brexit plays out. The current COVID-19 pandemic isn't making anything easier.
What You Need to Know
You Must Register for VAT and Collect VAT Fees
As a U.S. online retailer, you will now be required to create an online account with Her Majesty's Revenue and Customs (HMRC) and register for a VAT number in order to deliver e-commerce orders to the UK. You will be required to collect all VAT fees from your buyers at time of product purchase. This VAT fee was previously collected when a parcel entered the UK, typically with the buyer having to pay VAT to release the package from Customs.
VAT rates vary dependent on product price:
Most Goods and Services valued UNDER £135 have a 20% VAT Rate
Goods and services shipped to the UK with a value between £0.01 and £135 (between $1 and approximately $180 USD) will incur VAT fee of 20% of the product price (not including shipping fees). U.S. online retailers selling products to UK buyers are require to collect this 20% VAT fee at the time of sale. Online retailers will be responsible to pay all VAT collected to HMRC every three months.
VAT for Goods and Services valued OVER £135
All shipments with goods and services valued higher than £135 (approximately $180 USD) will be subject to the current VAT procedures, which state VAT is payable as the parcels are being imported into the UK. These types of packages are often cleared through customs via parcel consolidators and all applicable duties and VAT will be paid to HMRC directly by the parcel consolidator, who then normally invoices the online retailer.

Do Sellers on eBay, Amazon or another Online Marketplace have to Collect VAT?

Very simply, yes. Online marketplaces (OMP) such as eBay, Amazon, Etsy and others will be responsible for collecting the VAT from the buyer when the sale occurs on their website as long as the price is £135 or less. For sales that are over £135, the OMP will not collect the VAT and existing import rules will go into effect (seller pays at port of entry).
More Info will be Required in Customs Documents
All parcel shipments into the UK will be subject to customs clearance and inspections, which could add significant delays for parcels being delivered to the buyer. U.S. online retailers shipping goods into the UK will need to provide import or export declarations to UK Customs. A customs invoice will be required for each parcel that shows UK VAT along with the product price in order for the parcel to be released out of customs.
Note: To accomdate these late breaking changes in UK shipping, we are modifying our software to accomodate new information required.
Elimination of the Low Value Consignment Relief
The UK is removing Low Value Consignment Relief (LVCR) – a rule that allowed goods and products from outside the EU with a value of £15 or less (estimated $20) to be tax exempt. In 2021, those products will now be subject to the 20% VAT rate.
The UK is taking these actions to ensure that UK businesses are not disadvantaged by competition from VAT free imports.
Failure to adhere to UK Customs procedures could result in:
• Parcels being refused entry into the UK by customs
• Parcels being returned to sender (including return shipping fees depending on carrier used)
• Parcels and products being destroyed
• Parcels incurring major delays in being delivered to buyer
• Parcels generating additional shipping and/or customs fees, or penalties
What You Need to Do
Create a UK Government Gateway Account
Create an account with Her Majesty's Revenue and Customs (HMRC). This done easily online at: https://www.gov.uk/log-in-register-hmrc-online-services
Note: This is a UK website. We have no control over any changes they may make to the process, but it is pretty straightforward and should just take a few minutes.
Register for a VAT number
After creating a UK Government Gateway Account, use your Government Gateway ID and Password to register with HMRC for a VAT number: https://www.gov.uk/vat-registration/how-to-register
Note: This is a UK website. We have no control over any changes they may make to the process, but it is pretty straightforward and should just take a few minutes.
Make Quarterly VAT Return Payments to HMRC
Online retailers must report and pay the VAT Return (taxes) collected from their online sales each quarter to HMRC. You can find your actual deadline inside your VAT online account, but in general the deadline for HMRC’s bank to receive payment is one calendar month plus 7 days after the end of the accounting period (annual quarter). If your VAT Return payment is late, you could be liable for additional late fees.
To submit your VAT Return, you can use HMRC’s free online service or one of the many commercial accounting software platforms that HMRC has partnered with. The approved software list includes many popular solutions such as QuickBooks Online, Sage Business Cloud and SAP.
Your quarterly VAT Return should include key data points for your UK sales such as:
• Total sales and purchases for your account (only orders delivered to UK)
• The amount of VAT you owe from your UK sales
• The amount of VAT you can reclaim (i.e. order returns, product defects)
• The amount of VAT refund due from HRMC

For me, I have orders on both sides of the $180 hurdle and I plan to collect the VAT on all orders, regardless, until there is an update to the software. The customer is going to pay it either way, and the customs forms will show he paid it when he places his order. I think this just changes when he pays it. At least, that's my current plan.

Having to provide an invoice stating all this won't be great unless it is somehow handled by the software.



Vince
Administrator

39845 Posts

Posted - 01/14/2021 :  03:26:13  
This is done now and I've added the changes to the updater. After updating the inccart.asp script you need to set the tax rate for the UK in the admin countries page.
After that set the following parameter in your vsadmin/includes.asp file...
uktaxthreshold=180
That will set the UK tax rate to zero after $180. If the exchange rate changes considerably you may have to adjust that figure but I think it's better to have this set manually so you know what will and will not have tax applied, than try to use the currency converter.

Vince

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PhilipW
Starting Member

USA
29 Posts

Posted - 01/14/2021 :  04:24:13  
Thanks, that's terrifically fast.

We're needing to update so this will be an excuse to do that.

Vince
Administrator

39845 Posts

Posted - 01/14/2021 :  06:17:09  
Hi Philip
I've added these changes to the v7.1 as well as the v7.2 updater lines by the way.

Vince

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ekrzycki
Advanced Member

USA
328 Posts

Posted - 01/14/2021 :  16:09:01  
Have you accounted for discounts in the calculation of the VAT threshold?
See "Minimum buy changes" within Suggestions as to how this affects the threshold.

Vince
Administrator

39845 Posts

Posted - 01/15/2021 :  01:38:37  
Hi ekrzycki
That's a good point and I've done that now and updated the updaters with the change.

Vince

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PhilipW
Starting Member

USA
29 Posts

Posted - 01/20/2021 :  05:52:41  
More on this....

I just went to update with the uktaxthreshold=180 parameter and the 20% tax, and that made me wonder about the settings since this VAT collection requirement applies to the "UK". To make sure I understood what UK means exactly, I looked it up.

From Google: The United Kingdom (UK) is made up of England, Scotland, Wales and Northern Ireland.

I note in the countries setup there is Great Britain and Northern Ireland listed as countries. The UK isn't actually listed as a country.

More from Google: Great Britain is the name of the island that is home to the countries of England, Wales, and Scotland. The United Kingdom (UK) is a country that is a union of the countries on the island of Great Britain, along with the country of Northern Ireland (which shares the island of Ireland with the Republic of Ireland.)

I think that definition explains why there is a separate listing for GB and Northern Ireland.

But for this UK VAT collection, I wonder about this because it seems like there needs to be UK country, and no Great Britain, nor Northern Ireland. Or the uktaxthreshold=180 needs to be doing both GB and Northern Ireland. I don't know how the parameter works.

In the meantime, I have added 20% tax to Great Britain and Northern Ireland.

Thoughts?

PhilipW
Starting Member

USA
29 Posts

Posted - 01/20/2021 :  08:05:40  
Well, a little more on the VAT.

It appears the total including shipping is being used in the calculation of the 20% tax. They specifically say the 20% vat does not apply to shipping costs.

It's been awhile, but we only collect sales tax in the US for Texas and Florida. Both of which tax shipping.

Is there a way to line item indicate if tax should be collected on shipping or not, by country?

Edited by - PhilipW on 01/20/2021 14:39:13

PhilipW
Starting Member

USA
29 Posts

Posted - 01/24/2021 :  13:17:21  
I'm pinging this thread as there are a couple questions above that affect the VAT tax still. TIA.

Vince
Administrator

39845 Posts

Posted - 01/25/2021 :  03:00:05  
Hi Philip
That's a good point about the shipping and I've updated the inccart.asp/php script in the updater to take account of this.
As for the UK regions that are affected by this, all of them should be taken care of in the update and yes, Northern Ireland would count as a part of the UK.

Vince

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PhilipW
Starting Member

USA
29 Posts

Posted - 01/25/2021 :  05:12:27  
Thank you. Might we be able to manually update that file? I'm asking, because we have a few mods that we have to manually verify and edit when we run the updaters.


More added -> is there a way to just not accept orders under $180 from the UK, or is my only option to turn off that country completely?

Edited by - PhilipW on 01/25/2021 06:38:43

Vince
Administrator

39845 Posts

Posted - 01/25/2021 :  08:46:08  
Hi Philip
quote:
Might we be able to manually update that file?
Yes. And what I would do if I were you is get a copy of this...
https://www.scootersoftware.com/
This is a file comparison tool and if you match the latest updater to your modded version it will clearly show you where the change is and make it easy to merge them.

Vince

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ekrzycki
Advanced Member

USA
328 Posts

Posted - 01/25/2021 :  10:35:19  
I'm with Philip on this one - I need to setup UK with a minimum buy:

"More added -> is there a way to just not accept orders under $180 (user defined threshold) from the UK, or is my only option to turn off that country completely?"

PhilipW
Starting Member

USA
29 Posts

Posted - 01/25/2021 :  11:46:20  
Thanks Vince. I'll get it.

ekrzycki
Advanced Member

USA
328 Posts

Posted - 02/13/2021 :  09:11:05  
Just wanted to check status on this one. Is it still in the works to be able to add a minimum buy per country? I still have UK disabled while waiting to see if I can set the min buy from there.
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