26th August 2021

New country, new customs framework

Perhaps the most noticeable immediate effect of EU Exit for UK consumers is being felt when buying goods from abroad.

By Elisabetta Sciallis
Lawyer, UK ECC
We are seeing complaints particularly in relation to understanding who should collect the duties/VAT on consignments purchased by UK consumers from EU traders

The new year brought the end of the EU Exit transition period and with it a number of structural changes for consumers making purchases cross-border. These include the new Customs and Excise rules that are now in place when buying goods from European Member States. On January 1 the UK left the EU and became a ‘third country’ – in other words, a country outside the EU economic structures, the Single Market and the Customs Union.

This means that the rules previously applying to goods imported from non-EU countries also now apply for incoming goods from the EU, albeit with some differences. From a consumer’s perspective, as soon as UK residents buy a product from an EU country, which will be shipped to the UK, consumers now become importers and are liable for Customs and Excise Duty as well as Value Added Tax (VAT) charges levied on the shipment.

EU businesses selling directly to UK consumers, and those online marketplaces that facilitate such transactions, have found themselves needing to register in the UK with HMRC. They have also become responsible for charging, reporting and accounting for UK VAT in certain circumstances.

These changes have presented UK consumers and EU traders alike with a number of challenges, apparent inconsistencies and ultimately some unwelcome surprises as parties adjust to the new rules and processes.

Adjustment period

The UK International Consumer Centre (UK ICC) has been busy supporting consumers as they navigate these issues. We are seeing complaints particularly in relation to understanding who should collect the duties/VAT on consignments purchased by UK consumers from EU traders. This is in part due to the distinctions now being made between consignments of goods valued at £135 or less (excluding shipping and insurance, ‘unless they are included in the price and not separately shown on the invoice’) and those over £135.

Whilst the rules regarding payment for consignments of goods above £135 are the same as the existing rules for import from non-EU countries where import VAT is due at the border, and typically payable to the courier on delivery, the purchase for consignments of goods of £135 or below is covered by new rules. These rules have been introduced to avoid charging import VAT at the border and thereby reduce ‘friction’ for the shipping of low-value high-frequency goods from the EU.

In these circumstances ‘supply VAT’ is now due which should be collected at the point of sale by the EU trader, who then passes this on to UK HMRC. The rules also contain exclusions in the case of consignments of goods containing excise goods (i.e. alcohol, tobacco) or non-commercial goods (for example, gifts relief – unless over £39) where specific rules apply.

Among the complaints the UK ICC has received due to these new rules, unexpected charges are the most common. It may be that the consumer was simply unaware that a consignment valued above £135 would now attract extra charges payable to the courier prior to delivery (potentially including VAT, customs duties and courier handling fees). However, we have also seen more complex issues, related to double VAT for example. Here we have been contacted by consumers who had ordered goods online before the end of the EU Exit transition period (so VAT was collected at point of sale on behalf of the appropriate EU Member State), but their consignments were delayed until the new year when the new rules apply, thereby attracting unexpected new charges (import VAT due to HMRC charged by courier on delivery). We have also seen VAT double charging due to mistakes in custom declarations or errors by other parties.

Further, consumers have experienced difficulties in exercising their right to return goods for a full refund. In some cases, consumers have found themselves responsible for requesting a refund of VAT directly from HMRC, separately to the refund of the purchase price due from the EU trader. In those cases where a refund of VAT is due from HMRC, it must be obtained via courier specific forms, some of which are complex. We have also had experiences of traders refusing refunds due to complexities over VAT, including extra VAT charges arising from incorrect returns procedures. Whilst these issues are undoubtedly part of an evolving process, they are complex, time consuming, laden with potential for dispute and likely to cause significant consumer detriment, especially for the most vulnerable.

Time will tell

Regarding consumer law covering these issues, in the immediate short term consumers have the same substantive consumer rights when buying online from EU retailers as before EU Exit. This means consumers have the rights to return goods, and traders have the duty to give cancellation rights to consumers under EU laws. However, whilst at the time of writing none of the above issues have been tested in court by a UK ICC customer, if the time comes for such action, consumers may struggle due to a significant reduction in routes to redress post-EU Exit.

In summary, we are still in a period where EU traders and UK consumers alike are learning about the new rules and what they mean for cross-border sales. Whilst some EU sellers and platforms have rapidly adapted their systems to display the correct prices and information for UK buyers, others have been slow to do so for various reasons, and some have stopped selling to the UK entirely due to increased uncertainty and risk.

Generally speaking, UK consumers shouldn’t notice any changes when purchasing consignments of goods of £135 or below from the EU, but they should be mindful of extra import-related charges for consignments above £135. This means the final price as calculated on a website may no longer represent the ‘total cost’ and additional costs (VAT, customs duties, courier charges etc) may be payable.

The laws regarding the return of goods from the EU are unchanged in principle, but in practice obtaining a refund can be lengthier and more complicated if VAT needs to be reclaimed back from HMRC as part of the process.

Ultimately, if problems occur which require resolution in court, UK consumers have less routes to redress.
If consumers have purchased goods from a trader located in an European Member State, Norway and Iceland and have been charged unexpected duties, taxes or fees when buying online they can contact the UK ICC for help in dealing with these matters.

(Disclaimer: Throughout this article, I refer only to the import of goods (as opposed to services) and I do not cover the particular procedures for Northern Ireland).

About the author

Elisabetta Sciallis is the UK International Consumer Centre Executive, a qualified lawyer and accredited mediator, specialising in cross-border dispute resolution and access to justice.


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