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  • Retail and online goods and services

    There are numerous VAT issues and opportunities for retail businesses, particularly online businesses, with issues on the increase now the UK has separated from the EU for VAT purposes. The changes introduced 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 that arose on 1 January 2021. UK VAT is no longer chargeable on goods shipped to EU customers and the Distance Selling rules no longer apply. It may therefore be necessary for UK suppliers to register for VAT in other EU countries, although this might not be a requirement for some businesses selling through online marketplaces. We have already assisted many 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 small businesses) who have EU customers. The pre-Brexit UK Mini One Stop Shop arrangements are no longer available, and many UK businesses have become liable to register for VAT in the EU.

     

    However, there is now an alternative EU One Stop Shop VAT registration process that simplifies the EU VAT process.  Although an EU VAT registration will be required by many UK businesses, they will be able to submit a single EU VAT return to cover sales in all EU countries. We can ease the burden by helping clients with their EU VAT registration requirements.  We also have the knowledge and overseas networks to assist online service providers manage their ongoing EU VAT compliance requirements.

    VAT and Retail Promotions

    Because retailers/online sellers regularly use promotions to attract customers, there may be opportunities to make VAT adjustments where discounts, vouchers, or other promotions are used. It may also be possible to obtain retrospective VAT refunds where adjustments 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

    Call or email us any time or, simply fill out the contact form below and a member of our team will be in touch.

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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.