£135 rule regarding VAT - B2C

We are dealing with the following scenario: An EU-based company, A, is selling directly to UK B2C customers. Company B LTD, a UK-based subsidiary of Company A, acts as the importer of record for goods coming into the UK from the EU warehouse. The terms of the transaction are DDP, which means that Company B is responsible for paying import duty/PIVA. The sales VAT is charged to UK customers. We have some questions related to this situation: -For sales to customers with a value of less than £135, should Company A charge sales VAT on the invoice to the customer? Should Company A declare and pay sales VAT to HMRC? -For sales to customers with a value of more than £135, should Company A declare and pay sales VAT to HMRC? Should the sales VAT be charged on the invoice to the customer by Company A?

Hi,

If the goods are over £135 then company B, being the importer of record will account for the import VAT. When the goods are sold then this will be a sale between company B and the end customer and so UK VAT will need to be charged.

For goods below £135 then the sale between company A and company B will be accounted for under the reverse charge procedure. You can see guidance here:

Goods that are outside the UK at the point of sale

Please see section 'Business to business sales to UK VAT-registered customers' in the link above.

There will then be a supply between company A and the end customer and VAT will need to be charged on this.

Thank you.