Import VAT and custom duty question

Hi, I am looking to import an electrical product into the UK from a supplier in China and I'm wondering if I need to pay import tax on it? I will be essentially drop-shipping the product to my customers (contacting the supplier each time an order comes in and asking them to post it to the customer). Do I need to pay import VAT on the product? I am buying it for £25 from the supplier (the cost of shipping brings each item to around £45). I do not believe I need to pay any customs fee as it is below £135 in value. And can you think of any circumstance in which the product could be held up at customs? I want to avoid this at all costs as I can imagine it will be a headache for customers. Thank you in advance.

Hi.There would be no import VAT charged if the item is below £135.
However there are clearly 2 transactions happening in this scenario.
The Chinese supplier will be making a supply to you and you will then be making a supply to your UK customer.
If you are not VAT registerted then the Chinese supplier will need to charge you UK VAT and if you are VAT registered then you will account for this supply on the reverse charge procedure.
Please see the guidance below:
Changes to VAT treatment of overseas goods sold to customers from 1 January 2021
Please speak to our international Trade Team in advance to make sure that there will be no delays with these imports.
Please contact them as below:

Imports and exports: general enquiries

Hi, I am very confused. How do I know if my Chinese supplier is charging me VAT? When I place an order on Alibaba there is no extra fee for VAT. Is VAT baked into the price? Do I need to ask my supplier to charge me extra for VAT? What’s to stop them just pocketing the money? And I don’t know what reverse charge procedure is. I read the link you sent me but it’s all jargon. Can you explain what I need to do in simple language? Thank you and apologies for being so clueless about all this, I do want to get it right though. I assumed I wouldn’t have to pay VAT on imports and I’d just have to charge my customers VAT on my sales.

Hi,

The only way to confirm if you are being charged VAT is to contact the supplier.

If the overseas supplier is selling goods to you in the UK below a value of £135 and you are VAT registered, then the overseas supplier will not charge you VAT. They will instead ask you to account for the sale under the reverse charge procedure.

This involves you accounting for the VAT on your return,where the inputs match the outputs and you are essentially just accounting for the VAT but not paying anything over to HMRC.

Reverse charge is normally used only for services supplied from overseas but is used for goods in this scenario.

You can find guidance on how reverse charge is accounted for on the VAT return here

Place of supply of services (VAT Notice 741A)

Thank you.