HMRC publishes simplified VAT guidance for overseas sellers

HM Revenue and Customs (HMRC) has published simplified VAT guidance for overseas sellers, with a new translation aimed at Chinese retailers that sell goods online into the United Kingdom.

The guidance, Selling goods using an online marketplace or direct to customers in the UK has been translated into simplified Mandarin to support sellers exporting goods from China to comply with UK import and VAT regulations.

In 2022, the UK imported £83.3 billion in goods and services from China and Hong Kong. Online shopping accounted for 26.5% of all UK retail sales in 2022, with a substantial number of goods being bought from international sellers via online marketplaces.

HMRC is encouraging UK agents and shipping companies to share the simplified guidance with their customers.

The information explains when and how VAT and import duties must be charged to customers by international sellers. It explains the different processes for direct to customer sales, and for sellers using online marketplaces.

Marc Gill, Director for Individuals and Small Business Compliance at HMRC, said:

“We have been working closely with international partners to better understand what information overseas sellers need in order to comply with their UK tax obligations.

“We have acted on feedback from businesses to simplify and compile this online guidance into one, easily accessible place on GOV.UK. We have also recently published a simplified Mandarin translation of our guidance following research conducted with Chinese businesses.

“By making our VAT and import duty rules easier to understand, we will be able to increase tax compliance levels for online sellers. We are asking UK freight, customs and shipping agents to help us reduce the tax gap by sharing this simplified guidance with their customers. By working together, we can help everyone pay the right amount of tax at the right time.”

HMRC’s updated guidance has been published following detailed consultation and research with overseas sellers and brings together all relevant guidance in one place on GOV.UK. By making the process clearer and easier to follow, it will support overseas sellers to comply with their tax obligations and help HMRC to reduce the tax gap.

In 2018 HMRC signed an updated Memorandum of Understanding (MOU) with the General Administration of Customs China (GACC). During the tenth UK-China Economic and Financial Dialogue in 2019, HMRC agreed to provide Chinese businesses with appropriate tax and customs guidance. In 2020, HMRC commissioned research with Chinese online sellers. The report: Knowledge and attitudes of online sellers in China to UK tax compliance was published in 2021. Recommendations from that research led to the development of new guidance and its translation into simplified Mandarin. The relevant guidance has been brought into a collection page on Gov.UK, Selling goods using an online marketplace or direct to customers in the UK.

Notes to editors

1. International sellers sending goods to customers in the UK have different VAT and import obligations depending on whether the goods are sold directly through their own website, or via an online marketplace. There are also different tax rules for goods under the rateable value of £135, and goods exceeding that value. The GOV.UK pages pull all that guidance together in one place, and use simplified language to make it easier to follow.
2. In 2015 a MOU and Operational protocol between HMRC and the GACC was signed during the Chinese state visit to the UK. This was in the presence of PM David Cameron and President Xi Jinping during talks at No.10. The updated MOU was signed in 2018 by HMRC Director General Customer Compliance Group, Penny Ciniewicz, and Customs Minister YU Guangzhou in the Great Hall of the People, Beijing.
3. In 2020, HMRC commissioned research with Chinese businesses who sell goods online to the UK. The research sought to gain a greater understanding of their knowledge, attitudes and behaviours in relation to their UK tax and customs obligations. The report: Knowledge and attitudes of online sellers in China to UK tax compliance was published in 2021.
4. In 2022, the value of goods and service imports from the USA was £101.2 billion, from China and Hong Kong was £83.3 billion, and from Germany was £79.1 billion. Source: UK trade in numbers (updated 17 February 2023).
5. Follow HMRC’s Press Office on Twitter @HMRCpressoffice