December 31st came and went. We waved goodbye (and good riddance!) to 2020 and the EU said their final farewell to the UK. Many aspects of the France/UK relationship have already changed, and we will be seeing many more adjustments in months and years to come.
Like many other French businesses working with British clients, Renestance is working hard to stay abreast of the changes and keep you up to date in an ever-evolving landscape. Since January 1st, a number of trade regulations are changing, and some new ones will be coming into place to reflect the UK having left the EU.
Below we set out an overview of the main points to note so far concerning VAT for businesses based in France who sell goods to customers in the UK (B2C).
If you sell through an Online Marketplace, different rules apply. This article does not cover the provision of services to the UK as the official rules on this are still unclear.
UK VAT registration
If you are selling physical goods or digital goods to UK consumers (individuals) directly (without going through an Online Marketplace):
- You MUST register as a foreign business for UK VAT as of 1st January no matter your turnover, as there is no longer a VAT-free threshold.
- Find out how to register on the UK government website here.
Note that some businesses can register online whilst others must do so by post.
IMPORTANT: Until you get your UK VAT number, you will not be allowed to charge or display VAT rates, but you will still be liable to pay HMRC for any sales in that period. To account for this, make sure you increase your prices to reflect the added VAT and explain the price increase to your customers until you receive your number. You can then re-issue any invoices to show VAT.
From the moment you get your VAT number you will have to:
- Show all VAT information on your invoices
- Keep VAT records and a VAT account
- Submit VAT Returns and pay any VAT due to HMRC
One exemption to this registration rule is if you are a 100% B2B (business to business). Check with HMRC or an international tax advisor if you think you fall into this category.
VAT and customs declarations on UK imports
Although the rules for import into the UK are still evolving, a few main points have been set out for products shipped into the UK so far:
For packages worth less than £135
- VAT must be paid at the point of sale. All VAT information must appear on the receipt and duplicates kept for your records. For example: you are a business based in France selling handmade Bérets at €50 a unit. A UK customer buys 2 bérets (worth €100 = £88). The customer pays 20% VAT extra = £105.6 (plus postage and packaging…)
- If the customer provides you with a valid UK VAT number, the liability to account for VAT on the packages worth £135 or less will switch to the UK VAT registered customer
- You/the seller will still need to make a customs declaration
For packages worth over £135
- Consignments with a value above £135 will be subject to VAT and customs in the current way
- 2 options here:
- You/the seller pays the import VAT and duties on customs clearance and can then reclaim them with your UK VAT number
- OR your customer pays at customs or to the delivery service, which would mean you/the seller would have to make sure they knew this was the case when they made their purchase or risk giving them a nasty shock.
The French Douane website has lots of helpful resources (in English too) regarding customs declarations and how they are changing so we recommend you check the info out here.
For professional accounting or business advice please contact us and we can connect you with one of our approved Renestance partners.
Additional links for reference:
Harriet is a British born, French raised, European who loves resolving problems and knowing when she's helped out. Her energy and positivity are a great fit with the rest of the Renestance Team and a treat for customers!
All articles by: Harriet Amazon-Brown