The UK Tax Authorities (HMRC) has issued The Value Added Tax (Distance Selling) (Amendments) Regulations 2024, in relation to the OSS and IOSS scheme applicable to Northern Ireland and UK.

In relation to the IOSS, as of 1st March 2024, businesses established in the UK and Northern Ireland, which sell low-value goods (net value of GBP 135 or less) from outside the EU and Northern Ireland to customers inside those regions, will have the option to register with HMRC for the VAT Import One Stop Shop. Up to now, registration for this scheme was only possible from within an EU Member State.

Northern Ireland businesses using the IOSS scheme have so far been able to account for UK VAT due on sales within the UK in their IOSS declaration. However, from 1st March 2024, UK VAT due on sales of low value goods sold to B2C customers in the UK (including sales between GB and NI) will need to be declared in the regular UK VAT Return.

The penalties and interest regime for businesses using the IOSS and OSS schemes will align with penalties and interest regime introduced in the UK from 2023, under which penalty points are issued to taxpayers who fail to file their UK VAT returns on time. A penalty point is issued to a taxpayer every time they fail to submit a VAT return on time. Once the penalty point threshold is reached in a given period a penalty will be imposed on the taxpayer.