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<p>Before the UK left the EU, sales of goods from the EU to UK customers were already
subject to VAT. This has not changed. Prior to the end of the transition period, VAT
was collected and paid through the VAT return system. For sales to consumers or non-VAT-registered
businesses, VAT was either due in the EU Member State or in the UK, depending on whether
the volume of the supplier’s sales made into the UK breached an annual threshold.
For sales to VAT-registered businesses, the VAT registered-business would be responsible
for accounting for the VAT on a VAT return through what is known as a ‘reverse charge’.
The VAT-registered business could reclaim this VAT as input tax on the same VAT return,
subject to the normal recovery rules. Only sales to the UK from outside the EU were
subject to import VAT collection at the border.</p><p> </p><p>Now that the transition
period has ended, the UK has used its freedom from EU rules to create a fairer and
more robust tax system, while also complying with World Trade Organisation rules by
treating EU and non-EU goods the same. For goods in consignments up to £135, VAT is
due at the point of sale. Where a UK VAT-registered business provides its VAT registration
number to the supplier, the VAT registered business is responsible for accounting
for the VAT due on the goods through a reverse charge. For goods in consignments over
£135, import VAT is due and UK VAT-registered businesses can choose to use ‘postponed
VAT accounting’. Accounting for VAT on a VAT return in these ways allows businesses
to reclaim it as input tax on the same VAT return, as was the case under the previous
rules, and ensures continuity for businesses.</p>
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