Reality, the move by the UK was not spurred on by Brexit, was not unique and actually has its roots in the EU e-commerce package which is scheduled to be implemented by EU Member States on 1st July 2021. January 1st 2021 a change to UK VAT law took place – but the fallacy is that it was to do with Brexit. This change came as a result of an EU-wide e-commerce shift to try and protect businesses from overseas sellers that could undercut them on price, via lawful means by applying the Low Value Consignment Relief (LVCR), or unscrupulously by under-declaring the value of goods to be under the LVCR threshold to avoid VAT. Brexit merely meant that the UK could implement these new rules according to its own requirements and timetable. Change sees LVCR stopped as a system and instead the use of the e-commerce package following consultation throughout the EU. After years of complaints about unfair competition and a VAT gap in the billions, the shift will see VAT paid by the vendor when goods are imported into the EU when the goods are less than 150 Euros in value.
Increased or more stringent tax and associated import/export rigmarole, there is an inevitable pushback against these systems coming into play at the moment in the UK. Because the package protects UK businesses but is yet to be implemented with the EU, countries such as the Netherlands will currently be feeling as if they are playing with a loaded die. But once the package makes its way through the European Union, there will be a clear sense that the playing field is level once more with global sellers unable to undercut price as they once could. Technology is coming to the fore with increasingly digitized tax regimes, the use of systems such as the EU ‘one-stop-shop’ to minimize the documentation needed when selling across Europe and new schemes that will place the onus for tax collection on online marketplaces. Specialists operate in these areas, simplifying and automating tax and VAT processes, and crucially ensuring that businesses know what they need to pay, what details to give and the time frames for doing so. Businesses may have already made ill-advised decisions based on the conflation of e-commerce rulings and Brexit; something which we can’t afford to see continue as the business world continues to bounce back from a year of the unknown.