UK Carrier Scheme – when a carrier becomes liable for VAT on a shipment

Do you sell goods to the United Kingdom online and use couriers such as DHL, FedEx, UPS or Royal Mail? You need to understand a mechanism that can unexpectedly shift liability for import VAT onto your carrier — which may result in a refusal to deliver the parcel or an unexpected surcharge presented to the recipient at the door. The UK Carrier Scheme is a system introduced by HMRC that, in certain circumstances, treats the carrier as the party responsible for accounting for VAT on an imported consignment. The mechanism applies primarily to consignments with a value below £135 — which means the vast majority of e-commerce shipments from Poland to the UK. Understanding the UK Carrier Scheme is essential both for businesses sending goods to the UK and for carriers and logistics operators. In this article we explain exactly what the scheme is, when a carrier becomes a "deemed supplier", what the consequences are, and how to avoid them.

What the UK Carrier Scheme is and where it comes from

The UK Carrier Scheme is a VAT liability mechanism introduced by HMRC as part of the post-Brexit import VAT reform in 2021. That reform changed the rules for VAT on consignments valued at up to £135 — previously exempt from VAT at import under the Low Value Consignment Relief (LVCR), they are now subject to VAT at the point of sale or at import.

The Carrier Scheme is distinct from the concept of "carrier liability" in the context of GVMS — that term concerns a carrier's responsibility for transporting goods across the border without the appropriate customs documents. The UK Carrier Scheme is a VAT system, not a customs one.

Legal basis: VAT Act 1994 as amended by the Finance Act 2021, elaborated by HMRC Notice 300 and Notice 702.

The key threshold: £135

The scheme applies exclusively to consignments whose goods value does not exceed £135 (excluding transport and insurance). For consignments above £135 VAT is accounted for in the usual way at import by the importer or their customs agent.

When a carrier becomes a "deemed supplier"

The term "deemed supplier" means that the law treats the carrier as the seller of the goods for VAT purposes — even though its actual service is purely transport. This occurs in specific circumstances:

Scenario 1: No VAT declaration by the seller or marketplace

When goods valued at up to £135 are imported into the UK, and: - The overseas seller is not registered for VAT in the UK, and - The seller is not using OSS (One Stop Shop) or IOSS for UK purposes, and - A marketplace (Amazon, eBay, Etsy) has not collected VAT at the point of sale

...then HMRC may treat the carrier delivering the consignment as the "deemed supplier" responsible for VAT.

Scenario 2: Discrepancy in the declared value

If the carrier has reason to believe that the declared value of a consignment is understated or that the documentation is incomplete, it may be held liable for VAT on the actual value of the goods.

Scenario 3: Missing required documentation

Where a consignment is not accompanied by the correct customs and VAT information (value declaration, goods description, seller's EORI number or UK VAT number), the carrier may bear liability.

How large courier companies manage Carrier Scheme risk

DHL, FedEx, UPS and Royal Mail have each implemented their own IT systems for managing UK Carrier Scheme risk. These mechanisms include:

Automated VAT-status verification for the seller Before accepting a consignment destined for the UK, the courier's systems check whether the seller holds an active UK VAT number or whether the consignment originates from a marketplace that declares it has collected VAT (IOSS). A failure to match may result in the consignment being rejected or a deposit being requested.

Consignment classification by VAT risk Consignments are automatically classified by risk priority. A high-risk code (e.g. electronic goods with no EORI number) may trigger manual verification.

Collecting VAT at delivery (DDP — Delivery Duty Paid) Some couriers offer a DDP model in which the courier collects VAT from the sender or recipient itself and accounts for it with HMRC. This eliminates the Carrier Scheme risk — but requires the sender to configure their shipments accordingly.

Delivery model	Who pays VAT	Carrier Scheme risk
DAP (Delivered at Place)	Recipient at delivery	High — if the seller has not accounted for VAT
DDP (Delivered Duty Paid)	Sender/courier upfront	Low — VAT accounted for before delivery
IOSS (via marketplace)	Marketplace at point of sale	None — VAT accounted for by the platform

What this means for e-commerce merchants selling to the UK

For a Polish business or dropshipper sending goods directly to the UK from a warehouse (not through a marketplace), the UK Carrier Scheme may mean:

Refusal to accept the consignment by the courier If the courier judges that VAT has not been properly accounted for, it may refuse to accept the consignment for transport or hold it at the border.

Additional charge at delivery to the recipient The courier may collect VAT (20%) on the goods value directly from the recipient when delivering the parcel. A customer who paid a VAT-exclusive price in your shop receives an unexpected surcharge — which damages the shopping experience and generates returns.

Risk of HMRC holding the carrier liable If HMRC considers that the courier was aware of the missing VAT and delivered the goods nonetheless, the courier faces liability for the unpaid tax.

How to avoid problems with the UK Carrier Scheme

There are several proven methods for eliminating the risk:

UK VAT registration A Polish business selling goods to the UK at values up to £135 should consider registering for UK VAT (or using IOSS through a platform). A registered seller accounts for VAT itself — the carrier does not become a deemed supplier.

Using IOSS through a marketplace If you sell through Amazon.co.uk, eBay.co.uk or Etsy, the platform typically collects UK VAT at the point of sale and accounts for it with HMRC. In that case the Carrier Scheme does not apply — but you must include the marketplace's IOSS number on the consignment.

DDP model with the courier Choose Delivered Duty Paid — the courier accounts for VAT on your behalf (collecting it from you upfront or adding it to the service invoice). More expensive, but it eliminates the risk.

Correct documentation on every consignment Every parcel to the UK (up to £135) should include: - Accurate goods description (HS/CN codes) - Declared value (the real value — not understated) - Seller's UK VAT number or marketplace IOSS number - Sender's EORI number (where applicable)

The impact of the UK Carrier Scheme on logistics model choice

The UK Carrier Scheme materially affects the operational decisions of e-commerce businesses:

UK fulfilment (warehouse in the UK) If goods are stored in a UK warehouse and dispatched from there to customers, the UK Carrier Scheme does not apply — that is a domestic UK sale. VAT is accounted for in the normal way. For Polish businesses sending to the UK on a regular basis this can be a favourable model.

Cross-border from Poland (direct model) Every consignment from Poland to the UK is subject to UK import rules. Without UK VAT registration or proper VAT accounting, the Carrier Scheme risk is real.

Marketplace platforms (Amazon FBA) If you use FBA (Fulfilment by Amazon), goods are stored in the UK — it is a domestic sale and the Carrier Scheme does not apply.