Reply To: Hi,I’m looking for some advice regarding collecting VAT (tax).As a result of Brexit – we (an NZ product manufacturing and retail business) will now be required to collect VAT for our UK customers. Despite wading through many online documents regarding this – and contacting NZTE – we are still left with many questions. (Eg: Do we need a UK bank account? How streamlined is the actual process of paying VAT – does it integrate in with Xero software etc? What are the other fiscal record-keeping obligations etc?)Most website say: “Refer to a Tax expert”.We are wondering:• Are there any businesses out there that have been through this process that we could perhaps liaise with regarding this? OR;• Does anyone know of any Tax Experts whom might be able to efficiently/effectively provide this information?Thanks!Terry


Hi Terry. To the questions you’ve posed, yes, as already answered, online filing could be done via Xero but under a separate UK subscription. Otherwise records from within the existing organisation records could be exported and compiled into a ‘manual’ return. It is not necessary to have a UK bank account, but it would be practical to do so to manage payments and refunds, noting HMRC will not pay refunds to a foreign bank account. Ahead of all this, has the existence and scope of your VAT obligation been established? The position is complex, as you have no doubt established.
HMRC guidance here –> https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk
Very broadly,
If you are selling directly to a UK business customer, they should deal with VAT via the reverse charge mechanism.
If you are selling goods with a value of < GBP135 directly to UK consumers, you will need to charge VAT, and, as you may be aware there is no minimum VAT registration threshold for non-UK sellers. From 1 January, VAT registration is therefore mandatory for non-UK businesses who make sales to UK customers. As might be expected, we understand there is a backlog of VAT registration applications with HMRC.
The position for the direct sale of goods with a value > GBP135 is unchanged in that either the customer or the seller is responsible for the payment of VAT depending on the sale terms. Contract terms should therefore be reviewed to ensure responsibility for the payment of import VAT (and duties) is clear.
If you are selling via an online market place, the outcomes will be different again and can make further comment if this is relevant.
All the best,