A no-deal Brexit will force international companies trying to fulfil Kickstarters in the UK to pay VAT, register with HM Revenue & Customs and maintain complex new tax records.
The UK uses Value Added Tax, better known as VAT, to turn the purchase of consumer goods into revenue for the Government. If you buy a thing, you are most likely paying VAT on it and, unlike in the States, this charge is embedded into the price tag. In other words, if a board game in a shop has a £45 price ticket, then you only pay £45 at the til.
Some items are exempt from VAT, children’s clothes, for example, or parcels entering the UK from abroad worth less than £15.
Parcel Hero, an international shipping company, who have written extensively about Brexit have issued a warning today. Tucked away in the UK Gov’s Brexit advice is the warning that in a no-deal Brexit that this VAT exemption will be dropped.
The bigger, problem, though, is the new record-keeping that international companies trying to fulfil Kickstarters with UK backers.
In a no-deal scenario, the UK government will expect overseas sellers to collect VAT on all parcels they send here with a value of £135 or less and be responsible with accounting that value with HMRC.
Parcel Hero’s Head of Consumer Research, David Jinks MILT explains;
That new level of complex VAT procedure could put off international traders and make us a far less competitive market”
Currently it is the receiver – that’s usually the buyer – who pays VAT on overseas parcels – which means the buyer is very aware they are having to stump up payment of VAT. But, in the reverse of normal practice, the Government now wants the overseas seller to pay VAT on items worth £135 or under (including the new VAT on goods below £15) by including the tax in the purchase price to the consumer and then passing it to the UK Government. The Government’s new web site reveals: ‘Overseas businesses will charge VAT at the point of purchase and will be expected to register with an HM Revenue & Customs (HMRC) digital service and account for VAT due.”
Kickstarter fans in the UK will undoubtedly be aware of how expensive shipping can be on big board games from the US, in particular. A more significant concern is that many small companies have neither the ability nor capacity to manage international tax receipts. These no-deal Brexit changes may make it more tempting to decline money from any UK-based backer hoping for physical goods.
The good news, though, is that books have 0% VAT in the UK. Hopefully, this will make them immune to these changes. Please check with experts, though, rather than take accountancy information from a gaming blog should you be facing this situation yourself.
Creative Commons credit: Paper Work by Blazing Dust.
Check the comments below to see what readers have to say.
