RETAIL businesses in the UK must take immediate action to meet the new EU VAT regime.
According to top tax and advisory firm Blick Rothenberg, retail sectors in Britain who wish to trade in the UK should act now to meet the new VAT regime which starts on July 1.
The EU plans to remove its distance selling rules for e-commerce and is intending to create a one-stop-shop (OSS) where VAT return will be achieved for all transactions in the EU.
Mark Hart, a partner at the firm said: “For a UK business to make use of the OSS system it would need to register as a ‘non-union VAT payer in one EU member state of its choosing.
“The biggest burden will fall on those small and medium-sized business who sell some goods to the EU, but which may not be significant.
“Prior to the UK leaving the EU these small businesses were able to use a simplified scheme whereby sales to the EU were dealt with by their UK VAT returns and then sums distributed by HMRC to the relevant tax authority. This is no longer available.”
He added: “From 1 July 2021 small retailers essentially have three options, register in an EU member state where they make the largest sales, use e-selling platforms to handle the sales and VAT or arrange for VAT to be dealt with by their couriers.
“With marketplaces typically charging 30% for the handling VAT arrangements and many couriers not willing to handle VAT the only viable option is to register for VAT in an EU member state. Weighing up the costs if a business has more than 150 transactions a year, it is probably cheaper to register for VAT.”