The fact people are increasingly shopping online is no surprise, but it is interesting that some of the trends facilitating this - like supply chain and logistics - both have key tax considerations that every growing online retailer need to consider.
The first area to think of is VAT. UK businesses selling online to individual consumers in the EU may have an obligation to register and account for VAT in other territories if the sales they make into those territories exceed the registration thresholds.
This takes some businesses by surprise, particularly as many territories have a threshold of Euro 35,000 which is significantly lower than the UK. Then there's the tricky issue of Sales Tax when selling into the US.
Another key area to consider is Customs Duties. As supply chains become more complicated it is important to ensure that Customs Duty is not overpaid - that means considering who is acting as importer of record, thinking about the impact of warehousing or temporary imports and making sure that you obtain the requisite paperwork for each stage. Knowing the answer to these questions is also crucial for getting as close to a landed price as possible when looking at margin forecasts.
A final consideration as the UK prepares to leave the EU is the impact of indirect tax on supply chains. We're doing a lot of work in this area and have developed a tool to help clients assess the impact - more details in the link below.
Although people might prefer to shop in stores, there’s been a year-over-year increase in the frequency of online purchases since 2014. Today, nearly a third of consumers say they shop online at least once a week -- a 41 percent increase from two years ago. Improvements in the supply chain are helping fuel this growth, as consumers demand fast and reliable ways to purchase and receive items.