Gibraltar Businesses using eBay.co.uk

Do Gibraltar businesses who want to sell their products through eBay.co.uk have to apply to HMRC for some sort of VAT Exemption/Exception? Please can you advise?

Hi,

If you are selling goods over a value of £135 through a marketplace then it will depend on who the importer of the goods is. If you are the importer of the goods then you will be making a taxable supply and there would be a requirement to register for VAT from the first sale. If your customer is the importer then they will be required to account for the VAT and you will have no requirement to register for VAT.

If the goods are of a value under £135 then please see the guidance below:

Changes to VAT treatment of overseas goods sold to customers from 1 January 2021

Thank you.

Hi, Thanks for replying. In this case, we are selling goods, some over £135, through eBay.co.uk to UK clients. For items under £135, eBay has collected the VAT. For items above £135, the client is responsible for paying the additional VAT through the courier; Thus, I believe, making him the importer. eBay has asked us to get an Exemption letter or Certificate from HMRC or to register for UK VAT, and until then, our account is restricted. I am still non the wiser on what to do next. Help on this is much appreciated.

HMRC do not issue "VAT exemption letters", and yet eBay, Amazon and other online marketplaces continue to ask traders to provide a VAT exemption certificate, they ask for something that does not exist. HMRC have supplied the link in their post above, you need to read it thoroughly and specifically this section : "UK VAT will be due at the time the sale of goods takes place as it is now, but the significant change here is that the online marketplace will be deemed to be the supplier and so liable to account for the VAT on sales facilitated through its marketplace. This means that for VAT purposes the seller, operating through an online marketplace, will no longer be making a supply to consumers in the UK." "At the point the goods are sold to the customer, the overseas seller will be deemed to make a zero-rated supply of the goods to the online marketplace. This is so that the overseas seller will be eligible to register for VAT in the UK and reclaim any import VAT it has incurred in the course of importing the goods, subject to the normal rules for VAT deduction. The overseas seller should show the value of its supplies in box 6 of its VAT return (value of sales) but will not be responsible for declaring VAT on those deemed sales made through the online marketplace." For under £135 sales, eBay collects and pays the VAT to HMRC but the goods still belong to you, there is a "deemed sale" from you to eBay first (zero rated) and then eBay facilitates the collection of VAT from customer and also the payment of VAT to HMRC...that deemed sale from you to eBay is zero rated and as you are making a zero rated sale to eBay, triggers a UK VAT registration as you are not UK resident and cannot avail of the £85k VAT registration threshold. Speak to your Accountant, as the rules on £135/€150 are the same across the EU and not just unique to the UK and you'll not be the only business selling on a UK marketplace.

Hi ReginaldDuck,
If the customer is the importer of the goods over the value of £135 then you are not making any taxable supplies.
If you sell goods under £135 through a marketplace and the goods are sent directly from Gibraltar then you are not making taxable supplies.
Therefore there will be no requirement to register for VAT in these cases.
If the goods of any value are in the UK when sold and these goods are being sold via a marketplace then you will be making a deemed zero rated supply to the marketplace.
These zero rated deemed supplies are taxable supplies and will require you to register for VAT.
However you can apply for an exemption to reistration if you supplies are all or mostly zero rated.
Please see the guidance below, specifically section 3.11
3.11 When you might be exempt from registration
You may want to consider registration , however, if you import goods in to the UK before they are sold as it will allow you to recover the import VAT as input tax on your VAT return.
Thank you.

"

Once again thanks for the detailed information. I have relayed this information to a person at eBay directly with a copy of the link for the above thread and they have replied with the following: “I’ve been advised that an email or a link to a forum from the HMRC is not sufficient in an appeal, and will not be considered. A letter of exemption will be required to lift the restriction, if the seller does not provide a valid VAT number.”

The customer is the importer in all instances where the item is over £135. All goods are sent from Gibraltar both for items under £135 and above therefore not making any taxable supplies. We have not sold any items that are in the UK. I have told eBay that we would like to exclude the entire UK market to avoid this issue happening again, which they are happy with us doing after the restriction has been lifted. They have currently restricted our account from any sales until we either get a valid UK VAT number or a letter stating that we are exempt from joining the UK VAT for the points mentioned above. I have called the HMRC helpline and they provided the following e-mail to apply for a letter: btcvatexemptions@hmrc.gov.uk Ebay provided us with a different e-mail which is: vrs.newregistrations@hmrc.gov.uk, and they have confirmed that they do receive letters of exemption from HMRC for overseas territories and that they are quick to reply through this medium. I have e-mailed both these addresses on the 19th of March and have not received a confirmation or any kind of reply. All of our trading on eBay is frozen until we provide said document, would greatly appreciate any help possible on this matter.

Hi ReginaldDuck,
A letter from HMRC to confirm that you don't need to register for VAT is not possible so please contact the marketplace again regarding this matter.
Thank you. 

Hi ReginaldDuck,
HMRC will only confirm in writing to you that there is no requirement to register for VAT in two instances.
The first instance is where you temporarily breach the Registration threshold and do not wish to register for VAT as your sales will drop below the Registration threshold shortly after.
Please see section 3.7 below:
Who should register for VAT (VAT Notice 700/1)
The other instance is where you make only zero rated supplies and do not wish to register for VAT voluntarily.
Please see section 3.11 below.
3. Working out whether you need to register
For example, if you were importing goods yourself in to the UK and then storing them in a wharehouse for future sales via the marketplace then you would be making a Zero rated deemed supply to the marketplace.
In this scenario you could apply for an exemption as your sales would be at the Zero rate of VAT.
We do not provide a letter confirming that your business does not have to register in any other situation.
Therefore if neither of these excceptions apply to your business then you will need to contact the marketplace place again to discuss this.
Thank you. 

 

We have relayed this information again to the marketplace (eBay) to no avail. Your answer confirms the findings of our tax advisors both here in Gibraltar and in the UK, which is that neither of those scenarios applies to us and that we do not qualify to register for VAT. eBay does not recognise the reply from HMRC via this community thread or a direct e-mail from any member of HMRC that states the above in writing. They will only accept a letter of exemption in writing by HMRC, not by e-mail or in any other non-physical format. We have explained in detail, with the help of our accountant and tax advisor, why this is not possible. We have used the information in your replies and provided a link to this thread, on which they insist on this physical letter. I appreciate HMRC taking the time to reply in detail to my previous questions, which you have done a number of times. We have instructed the services of a tax advisor in the UK who is preparing a letter to further explain our fiscal position to them in an attempt to make sense of the situation. If there is any other avenue that we can apply to for this letter, it would be greatly appreciated, it is a very frustrating situation for all parties involved. I am sure this thread will be of help to others, as Jason Croke highlighted that eBay commonly asks for this illusive letter. We now know it is not something that HMRC provides, creating a spiral of confusion for all parties involved.

Hi,

HMRC unfortunately can't provide registration exemption letters as discussed.

You can write to HMRC and we can confirm this to you in writing so the marketplace can see that we don't issue registration exemptions.

VAT: general enquiries

Thank you.