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  • Retail and online goods and services

    There are numerous VAT issues and opportunities for retail businesses, particularly online businesses, and these will increase as the UK separates from the EU for VAT purposes. These not only concern the rate of VAT that applies to retail goods and services, but also to where the supply takes place (where there is a cross border element) and the timing and value of transactions for VAT purposes.

    Special rules for retail goods

    Online sellers will need to consider the changes to the VAT rules applied from 1 January 2021. UK VAT will no longer be chargeable on goods shipped to EU customers and the Distance Selling rules will no longer apply. It may therefore be necessary for UK suppliers to register for VAT in other EU countries, particularly businesses selling through online marketplaces. We are already assisting online traders manage their VAT requirements and can assist with overseas VAT compliance where required.

    Online Service Providers

    The VAT rules around the provision of online services (including ‘electronic services’) is complex and likely to cause issues for those businesses (even very small businesses) whose customers belong in an EU country. The existing Mini One Stop Shop arrangements will no longer be available, and many businesses will become liable to register for VAT in one or more EU countries. We have the knowledge and overseas networks to assist online service providers manage their VAT compliance requirements.

    VAT and Retail Promotions

    Because retailers/online sellers regularly use promotions to attract custom, there may be opportunities to make VAT adjustments where discounts, vouchers or other promotional items are used. It may also be possible to obtain retrospective VAT refunds where adjustments are available but have not been previously made. We have the expertise to help retail and online clients unlock VAT opportunities.

    How we can help

    Some areas of retail/online business where VAT opportunities and issues may arise are:

    • Discounts/vouchers/promotions:  is VAT being accounted for correctly?  Opportunities to obtain retrospective VAT refunds and permanently increase margin? Can arrangements be restructured to achieve VAT benefits?
    • Goodwill payments/compensation payments/returned goods – can output VAT adjustments be made?  Can customer terms be structured to support VAT savings?
    • Online sales/click and collect: Is VAT payment deferral possible? Is there an opportunity to use VAT to inject cash into business?
    • Zero-rating: are opportunities for zero-rating being maximised (including ‘mixed’ supplies of standard/zero-rated items)
    • Delivery charges: is VAT being overpaid on delivery charges?
    • Credit card chargebacks: can VAT adjustments be made?  
    • Bespoke VAT retail scheme:  VAT accounting method needs to be agreed with HMRC if turnover exceeds the retail scheme threshold
    • Non-UK sale of goods: has overseas VAT compliance been considered?  Overseas VAT registrations may be required if the value of sales to consumers in other EU countries exceeds certain thresholds.  
    • Online services – there are potential issues if you provide services, particularly electronic services, to non-UK consumers.
    • Input VAT: opportunities to enhance VAT recovery (e.g. accruals/expenses).
    • Commissions (e.g. finance/insurance):  Can VAT exemption apply to commissions received?  

    Get in touch with us today

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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.