The United Kingdom has established a comprehensive regulatory framework governing e-commerce businesses engaged in cross-border trade. These regulations encompass customs procedures, VAT obligations, and compliance requirements essential for businesses selling goods to UK consumers or exporting products from the UK to international markets.
Customs Declarations and Import Procedures
E-commerce businesses importing goods into the UK must comply with customs declaration procedures as mandated by HM Revenue & Customs (HMRC). Importers must submit an import declaration through the Customs Declaration Service (CDS) and ensure accurate classification of goods using the UK Global Tariff (UKGT). The correct application of the Harmonized System (HS) codes is crucial, as it determines duty rates, VAT applicability, and licensing requirements.
When shipping goods into the UK, businesses must provide the following details:
- Commodity codes (HS codes) for classification.
- Customs value, including product cost, insurance, and freight (CIF).
- Country of origin for tariff preferences and trade agreements.
- Import VAT and duties payable upon entry.
For shipments valued under £135, VAT must be collected at the point of sale and remitted to HMRC by the seller. For goods exceeding this value, import VAT and customs duties apply upon entry into the UK.
There are two main areas of regulations around e-commerce: distance selling and data protection. If you sell products through your company website and social media channels, or through online distribution platforms and marketplaces, such as Amazon and eBay, there are measures you need to take to stay compliant.
EORI Numbers and VAT Compliance
Businesses engaged in cross-border trade must obtain a UK Economic Operators Registration and Identification (EORI) number. An EORI number is required to interact with UK customs systems and facilitate the import and export of goods.
In addition, businesses selling goods in the UK must adhere to VAT registration requirements. Non-UK businesses supplying goods directly to UK consumers may need to register for UK VAT, collect VAT at the point of sale, and submit periodic VAT returns. The standard VAT rate in the UK is 20%, with reduced and zero rates applicable for specific products.
For businesses using fulfillment centers or third-party logistics providers (e.g., Amazon FBA UK), VAT obligations may vary depending on stock location and supply chain logistics.
Depending on whether your company has an established office premises in the UK or not, direct or indirect representation will apply.
Alinea Customs can assist your company with GB EORI registration and GB VAT registration, and quarterly VAT filing for foreign companies.
Exporting from the UK
When exporting goods from the UK, businesses must submit export declarations through HMRC cutoms declaration service (CDS) platform. Exports are generally zero-rated for VAT purposes, but businesses must maintain records proving that goods have left the UK.
Key export requirements include:
- Submission of an export declaration.
- Compliance with trade sanctions and restrictions.
- Issuance of commercial invoices and packing lists.
- Observance of product-specific regulatory standards.
E-commerce businesses selling to EU customers post-Brexit must also comply with the EU’s Import One-Stop Shop (IOSS) or the standard customs clearance procedures, depending on their business model.
Alinea Customs provide rapid export clearance through API integrations between your inventory platform and our ISO 27001 and ISO 9001 accredited customs software.
Multinational Enterprises
Companies that fall in the scope of Pillar Two reporting obligations must register for Pillar Two top-up taxes, using the following link: https://www.gov.uk/guidance/report-pillar-2-top-up-taxes
Your group must use this service to register for Pillar 2 top-up taxes, if you have:
- at least one entity located in the UK
- consolidated group annual revenues of 750 million euros or more, in at least 2 of the previous 4 accounting periods
References to ‘groups’ within this service also include single entities.
Registration must take place within six months of end of the first accounting period to begin on or after 31 December 2023.
Once your group has registered to report Pillar 2 top-up taxes, you must submit your first returns no later than:
- 30 June 2026, if the first accounting period you reported for Pillar 2 top-up taxes ended on or before 31 December 2024
- 18 months after the last day of the group’s accounting period, if the first accounting period you reported for Pillar 2 top-up taxes ended after 31 December 2024
Regulatory Compliance and Product Standards
UK regulations mandate that e-commerce businesses selling goods must comply with consumer protection laws, safety standards, and product labeling requirements. Specific sectors, such as electronics, cosmetics, and food products, are subject to additional regulatory oversight.
Key compliance considerations include:
- CE and UKCA Marking: Products must meet UK Conformity Assessed (UKCA) or CE marking requirements where applicable.
- Consumer Rights Act 2015: Businesses must provide clear refund and return policies.
- Data Protection (GDPR & UK GDPR): E-commerce platforms handling customer data must comply with data protection laws.
- Trading Standards: To sell products on the UK market many companies are required to register with their local trading standards office.
- EU General Product Safety Regulations (EU GPSR): When selling into the EU market, businesses must appoint a representative based in a member state. The EU GPSR also mandates the visible listing of critical information, such as the manufacturer’s name and contact details, safety instructions, and product model numbers. Read more: here.
Conclusion
Compliance with UK customs regulations is essential for e-commerce businesses engaged in cross-border trade. Accurate customs declarations, VAT compliance, and adherence to product regulations help businesses avoid penalties, streamline logistics, and ensure a seamless and reliable experience for UK consumers. Partnering with customs specialists such as Alinea Customs and leveraging digital customs solutions can significantly enhance operational efficiency in the evolving UK e-commerce landscape.
