EXPLANATORY NOTE
The Value Added Tax (Postal Packets and Amendment) (EU Exit) Regulations 2018 (“the Regulations”) make provision in relation to the liability to import VAT on the importation of goods from places outside the United Kingdom in postal packets whose contents are valued at £135 or less.
Regulation 1 provides for commencement and regulation 2 lists definitions of terms used in the Regulations.
Regulation 3 defines, in relation to importations of postal packets to which the Regulations apply, qualifying importations and excepted importations.
Regulation 4 provides that any requirement, direction, demand, notice or permission by the Commissioners under these Regulations may be made or given by a notice in writing, or otherwise, including by electronic communications to the last known address for electronic communications of a person.
Regulation 5 disapplies section 15(4) of the Value Added Tax Act 1994 (c.23) (“VATA 1994”) in relation to the determination of the person liable to import VAT in the case of qualifying importations. It also disapplies paragraphs 1 and 2 of Schedule 6 to the Taxation (Cross-border Trade) Act 2018 (c.22) which provides rules relating to the liability to pay import duty in the case of qualifying importations that are not excepted importations.
Regulation 6 makes the supplier of the goods which are the subject of a qualifying importation (“the supplier”) liable to pay VAT on the importation. It also provides for joint and several liability for import VAT in certain circumstances. The recipient of the goods will be jointly and severally liable with the supplier where an incorrect customs declaration is made which the recipient knew or should have known was incorrect and where a postal packet which is not accompanied by the supplier’s unique registration identifier is to be delivered by a postal operator acting in its capacity as a universal service provider. A UK-established postal operator will be jointly and severally liable with the supplier if the supplier has ensured that the postal operator has a legally binding obligation to pay the import VAT to the Commissioners.
Regulation 7 requires the Commissioners of Her Majesty’s Revenue and Customs (“the Commissioners”) to create and maintain a register of suppliers for the Regulations, and to allocate a unique registration identifier to suppliers who are registered.
Regulation 8 requires a supplier who makes qualifying importations that are not excepted importations to register pursuant to the Regulations with effect from the date of the supplier’s first qualifying importation that is not an excepted importation which occurs after the regulation comes into force in accordance with the commencement provisions in regulation 1(2).
Regulation 9 sets out the notification requirements for a supplier who is required to register and the requirement for the Commissioners to register the supplier who is entitled to be registered and to notify them of their unique registration identifier.
Regulation 10 allows a supplier who is not required to register to do so voluntarily if the supplier intends to make qualifying importations that are not excepted importations.
Regulation 11 allows the Commissioners to refuse to register a supplier if they consider it necessary for the protection of the revenue.
Regulation 12 sets out general requirements for the notification of a requirement to register and the voluntary registration procedure.
Regulation 13 allows the Commissioners to cancel the registration of a supplier if the Commissioners are satisfied the supplier has ceased to make and does not intend to make qualifying importations that are not excepted importations. The Commissioners may also cancel the registration of a supplier if they consider it necessary to do so for the protection of the revenue.
Regulation 14 provides for a penalty where a supplier who is liable to be registered fails to register under the Regulations.
Regulation 15 provides that a supplier will not be liable to a penalty if the supplier satisfies the Commissioners, or on appeal the tribunal, that there is a reasonable excuse for the failure to register.
Regulations 16 and 17 make provision for the assessment and enforcement of penalties.
Regulation 18 requires a supplier who makes a qualifying importation that is not an excepted importation to ensure that the supplier’s unique registration identifier accompanies the postal packet.
Regulation 19 requires a supplier registered under the Regulations to submit returns called ‘postal packet returns’ by electronic means to show the amount of import VAT due on qualifying importations by reference to accounting periods of three months, or such other period as the Commissioners may allow or direct. The Commissioners may direct the form and manner in which the returns are to be made and must provide for the means by which the receipt of the return is to be electronically validated. There is a rebuttable presumption that the return is made at the time recorded by the electronic validation process.
Regulation 20 requires a supplier to pay any import VAT due as shown on its postal packet return no later than the date on which the supplier is required to submit that return.
Regulation 21 makes provision for the correction of errors in returns and accounting and specifies the relevant time limits.
Regulation 22 requires a supplier to keep records in connection with qualifying importations made by the supplier for a period of six years and to provide copies of them to the Commissioners if requested.
Regulation 23 applies sections 73, 74, 76 and 77 of VATA 1994 for the purposes of the Regulations with specified modifications.
Regulation 24 allows the Commissioners to send a notice to the operator of an online marketplace where a supplier who makes qualifying importations that are not excepted importations in relation to goods supplied for a consideration through that online marketplace has not complied with any requirement of these Regulations. The notice provides that unless the operator of the online marketplace removes the supplier from the online marketplace within the time specified in the notice, the operator will be jointly and severally liable for any import VAT payable by the supplier on qualifying importations that are not excepted importations made by the supplier through the online marketplace.
Regulation 25 allows the Commissioners to assess the amount of import VAT due from the operator of the online marketplace under regulation 24 to the best of their judgment.
Regulation 26 provides for interest to be charged if an amount assessed under regulation 25 is not paid within 30 days beginning with the day on which the notice of assessment is given.
Regulations 27 and 28 provide that a person may submit an enquiry to the Commissioners regarding a unique registration identifier. The Commissioners may then disclose whether the identifier belongs to a supplier registered in the register kept under these Regulations and, if so, the name and address of that supplier.
Regulation 29 provides that a right of appeal lies to a tribunal with respect to the registration or the cancellation of the registration of a supplier, the refusal to register a supplier, any liability for or assessment of a penalty, the Commissioner’s refusal to make a repayment and any assessment. The regulation applies Part 5 of VATA 1994 (review and appeals procedure) for the purposes of these Regulations with specified modifications.
Regulations 30 and 31 amend the Value Added Tax (Imported Goods) Relief Order 1984 by removing the low value consignment relief which exempted packages valued at £15 or less from import VAT.
This instrument will be covered by a HMRC impact assessment which will be published and available on the website at https://www.gov.uk/collections/customs-vat-and-excise-regulations-leaving-the-eu-with-no-deal.