Question :
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

Question submitted 13/01/21 @ 05:43pm
Industry: Funding & Finance
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    Hi Terry, I spoke to Morgan Hardy recently who specialises in helping exporters deal with foreign GST, VAT and sales tax. His email is morgan@i-tax.co.nz and number. There are others in this group who will also be able to provide details of others who are skilled in this.


    Hi Terry, I sent Morgan an email and he’s expecting you to get in touch. He also wrote this. ‘For Brexit to require the collection of UK VAT when it was not previously required Terry would need to have been supplying via a non UK EU entity. It’s more likely this relates to non Brexit changes to the UK VAT on low value import rules. That is probably semantics and the answer to his question is: In terms of filing via Xero this can be done but a UK Xero account/organisation is required. Each Xero organisation is set up to file taxes in only 1 country. A UK bank account is not required but a UK VAT number will be. It would be helpful to work through the facts to ensure VAT is being accounted for correctly but it is possible to do this from New Zealand.’ He is happy for you to call him too 027 22 44 595. All the best, Rachel


    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,



    @rachel-adams Thank you very much for that and putting me in contact with Morgen. Really appreciated. I reached out and he was a great help to us.

    @darren-white Likewise thank you for your insights here. All good information.

    Yes we are selling primarily through an online market place – in our case Shopify. I know that Shopify does have a way of “turning on” VAT of UK customers – but I am unsure to-what-extent Shopify will provide reports of individual and total VAT collected etc. I will be having a more in depth look over the coming week.

    >> However, if you have anything further to add regarding VAT matters as it pertains to online market places – this would also be appreciated.

    Kind regards,

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