Value Added Tax Act 1994 section 7AA

Reverse charge on goods supplied from abroad

Section 7AA introduces a reverse charge mechanism for low-value goods imported into the UK, shifting the VAT accounting obligation from the overseas supplier to the VAT-registered buyer.

• When a VAT-registered business receives imported goods in a consignment worth no more than £135, the buyer (not the overseas supplier) must account for VAT on the supply.
• The consignment must not contain excise goods and must not be one where an overseas postal operator has agreed with HMRC to pay the import VAT.
• The effect of the reverse charge is that the law treats the transaction as if the buyer made a taxable supply to themselves in the course of their business, rather than receiving a supply from the overseas seller.
• HMRC has the power to change the £135 threshold by regulations.