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VAT nightmare incoming


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That looks more like a Party Political broadcast.

The word 'Bargepole' comes to mind.

 

That is all the comment you will get from me.

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Though Im familiar with the Idea of VAT would that affect me purchasing something from Hannant's and shipping to the states ? I don't think so but curious to know more details ? 

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From my point of view this is a good thing as it will level the playing field for home based online retailers, if it is able to be enforced and that is a big IF. Currently (online) retailers in the UK are having to compete with kits being sold in various Far Eastern (predominantly) outlets arriving in the UK with under declared values (or marked as gifts) etc. which the customers are then hoping will slip through the HMRC or will attract a lower VAT charge than would be the case if the same items were bought locally. There have been enough threads on here in the past discussing buying from the Far East for us all to know that it is very common and that the main reason is (by avoiding or attempting to avoid the proper charges) to get something on the cheap (and by not declaring the correct VAT due to HMRC is illegal anyway IIRC). Competition in the market place is normal and is a good thing but only when everyone is competing on a level playing field, the current system is the retail equivalent of some little lass from the local athletic club trying to compete against those East German "female" shot putters back in the day.

 

Duncan B

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9 hours ago, bentwaters81tfw said:

Ta

i can see how this can work with eg eBay 

But what will happen if eg LuckyModel just refuses to register and keeps sending packages? Are they going to impound them?

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This will not be a problem for the big boys but will sure be a problem for the smaller shops as will add an administrative burden and extra costs. Someone like HLJ will probably be able to deal with it, smaller outlets may just stop selling to UK customers.

And I can't blame the latter, in most countries it is the duty of local Customs to collect VAT, what the UK is saying is "we are not capable or don't want the hassle, if you want to send goods here you have to take the hassle. 

So in the end, while this may not have been the intended goal of the Government, it will be one more advantage for the big companies against the small businesses

 

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8 hours ago, Corsairfoxfouruncle said:

Though Im familiar with the Idea of VAT would that affect me purchasing something from Hannant's and shipping to the states ? I don't think so but curious to know more details ? 

 

No effect for you, as it will only affect companies from outside the UK who sell to UK based customers.

 

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I suspect this is largely aimed at Amazon and eBay as many small non-UK business sell through this route. These large market places are certainly able to handle the admin, and relatively easy to monitor and prosecute as required - there is also a huge potential return for HMRC

 

However I don't see how this could effectively be applied to small independent websites. How will they even know about it? Or be expected to understand and correctly apply UK VAT laws? How could it possibly be enforced - surely for small relatively low turnover sites (perhaps selling a bit of etched brass) the cost involved of any attempt to recover the VAT would exceed the amount received.

 

Perhaps its really just a bit of Brexit sabre rattling, though I'm not against levelling the playing field for UK sellers - though for me at least higher postage costs and longer delivery times tend to do this already.

 

Cheers

 

Colin

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3 hours ago, ckw said:

I suspect this is largely aimed at Amazon and eBay as many small non-UK business sell through this route. These large market places are certainly able to handle the admin, and relatively easy to monitor and prosecute as required - there is also a huge potential return for HMRC

 

However I don't see how this could effectively be applied to small independent websites. How will they even know about it? Or be expected to understand and correctly apply UK VAT laws? How could it possibly be enforced - surely for small relatively low turnover sites (perhaps selling a bit of etched brass) the cost involved of any attempt to recover the VAT would exceed the amount received.

 

Perhaps its really just a bit of Brexit sabre rattling, though I'm not against levelling the playing field for UK sellers - though for me at least higher postage costs and longer delivery times tend to do this already.

 

Cheers

 

Colin

I have to agree with your assessment that it will be a very difficult thing to apply to the independent websites. It sounds great in principle but did anyone at HMRC consider how they are going to police this? Still, if it even levels the playing field on eBay that will be something.

 

Duncan B

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The Tamebay site linked by @bentwaters81tfw says "For goods sent from overseas and sold directly to UK consumers without OMP involvement, the overseas seller will be required to register and account for the VAT to HMRC".

 

Out of interest does anyone know if any other country in the world expects small foreign sellers to register and account for VAT or the equivalent? I normally only buy abroad when the product isn't available from a UK seller and it's necessary to buy from the manufacturer directly. In the last year or so I have ordered from Russia (PAS Models), USA (Phase Hangar), Germany (Authentic Airliner Decals), Mexico (8A Decals), Canada (V1 Decals) and Israel (Small Stuff). Most of these are small cottage industry operations and the idea that a tiny part-time Mexican or Israeli manufacturer should register with HMRC and account for a couple of quid's worth of UK VAT is positively surreal.

 

Dave G

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Alternatively pay the tax yourself.  I can guess how popular that would be.  But otherwise UK businesses will be driven out of the market, British people thrown out of work.  In the end, that means you.

 

In practice, I suspect no or only token action will be taken against small traders of the kind you describe, if only because (short of the public benefit of a demonstration or two) the cost would vastly outweigh the returns.  This is indeed aimed at the big tax dodgers.  However, this could provide lots of jobs as customs/tax collectors for all the people thrown out of work by Covid and Brexit.

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Surely the same exemption for small traders would apply whether they are in the UK or overseas. There is a turnover limit below which traders don't need to be VAT registered, isn't there?

 

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I'd say wait until a more official source than Captain Kirk tells you what the scores on the doors are.  Also, beware of the politics of this.  We don't mind you talking about the practicalities, but once the mud-slinging starts, Mr Thread goes bye-bye :bye:

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A big reason for this will be to try and encourage buying or sourcing within the UK, thus helping the UK economy. These rules also bring us into line with what the US and Australia do as well. Potentially the biggest loser could be China but it'll also have an effect on EU trade with the UK if there is indeed a "No Deal".

 

There's an element of protectionism with all the good and bad that entails.

 

Mike.

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6 hours ago, ckw said:

I suspect this is largely aimed at Amazon and eBay as many small non-UK business sell through this route. These large market places are certainly able to handle the admin, and relatively easy to monitor and prosecute as required - there is also a huge potential return for HMRC

 

However I don't see how this could effectively be applied to small independent websites. How will they even know about it? Or be expected to understand and correctly apply UK VAT laws? How could it possibly be enforced - surely for small relatively low turnover sites (perhaps selling a bit of etched brass) the cost involved of any attempt to recover the VAT would exceed the amount received.

 

Perhaps its really just a bit of Brexit sabre rattling, though I'm not against levelling the playing field for UK sellers - though for me at least higher postage costs and longer delivery times tend to do this already.

 

Cheers

 

Colin


It appears to be aimed more at sellers out of Asia than anything to do with Brexit. Thats where the low value / gift declaration issue really seems to come from.

 

I just dont understand how you enforce it against a seller in, say, Hong Kong who is selling kits from his own website rather than via ebay. Its not as if HMRC are going to be able to go to HK and do anything to that seller. So what’s their plan?

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1 hour ago, Graham Boak said:

Alternatively pay the tax yourself.  I can guess how popular that would be.  

 

That is what happens in my Country: the postman rings the bell and tells me that there's something on which I have to pay VAT. I give the man the money, sign on the device he's equipped with and it's sorted. Not really much hassle.

If I'm not home I'll be left an advice and I'll have to go to the post office, pay the relevant VAT and get my kit. Again very little hassle and not a problem for the post service as they already handle money for a wide range of payment services. 

If however the reason is to try and keep citizens from buying abroad then fair enough, it's within the rights of the Government. Just imagine what would happen if other countries retaliate in kind, it would end any chance for many small UK businesses to be able to expand thei potential market. Some of these are not even VAT registered in the UK, how would they cope with the bureaucracy involved with having to register for VAT in Italy???

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Our postmen do not deal with money, only deliveries.  I can just imagine the outcry in this country if anything so sensible was introduced.  Not to mention the hassle with petty criminals.

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Yes, but we get cards or emails saying there is money owing. We pay at the post office and collect the item or via the internet, and the postie delivers next working day.

 

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This looks like bad news for U.K. modellers who buy from overseas:

tl;dr - The UK is eliminating the VAT exemption for shipments valued under £15 and they are making overseas vendors responsible for collecting VAT on shipments to the U.K. This will likely mean most overseas vendors will no longer ship to the U.K. to avoid the £1000 cost of submitting the forms to register with HMRC and the hassle of submitting VAT payments to the UK. I’d guess on-line marketplaces (OMPs) like Amazon and eBay will be unaffected but they will now collect VAT on purchases from outside the UK. Individual retailers (e.g. HLJ, Sprue Brothers, Eduard, etc) will now have to register with HMRC and collect VAT on packages sent to the UK).

 

Outline of the changes

For imports of goods from outside the UK in consignments not exceeding £135 in value (which aligns with the threshold for customs duty liability), we will be moving the point at which VAT is collected from the point of importation to the point of sale. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments.

The new arrangements will also involve the abolition of Low Value Consignment Relief, which relieves import VAT on consignments of goods valued at £15 or less.

Online marketplaces (OMPs), where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT.

For goods sent from overseas and sold directly to UK consumers without OMP involvement, the overseas seller will be required to register and account for the VAT to HMRC.

Business to business sales not exceeding £135 in value will also be subject to the new rules. However, where the business customer is VAT registered in the UK and provides its valid VAT registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge.”


https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

 

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  • VMA131Marine changed the title to Changes in U.K. VAT collection rules on imports. £15 exemption eliminated

So if an overseas seller just sends your parcel and doesn't pay the VAT. Will HMRC chase them up? Would it be economically viable?

And, If an overseas seller just sends a parcel, I am going to pay more for it's contents, do I then assume that matey will pay the VAT?

If he doesn't, will they then chase me? Sounds like it's simply not going to be worth buying even cheap stuff unless you REALLY need it.

 

I assume this will stop the RM and other agents from withholding your parcel until you pay them VAT & 'Handling' charges.

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14 minutes ago, Pete in Lincs said:

So if an overseas seller just sends your parcel and doesn't pay the VAT. Will HMRC chase them up? Would it be economically viable?

I would guess that before the U.K. accepts any mailed package for import it will have to have proof that VAT was collected and paid to HMRC. I don’t know how they would differentiate gifts from commercial packages, but my recollection is that gifts aren’t exempt from VAT either. The bottom line is most vendors outside the U.K. will just stop selling to U.K. buyers; it just won’t be worth the hassle.

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10 hours ago, ckw said:

However I don't see how this could effectively be applied to small independent websites. How will they even know about it? Or be expected to understand and correctly apply UK VAT laws? How could it possibly be enforced - surely for small relatively low turnover sites (perhaps selling a bit of etched brass) the cost involved of any attempt to recover the VAT would exceed the amount received.

Easy! The UK will tell foreign mail services and private shipping companies (eg UPS, DHL, etc) that they won’t accept any shipment for import unless it comes with proof VAT has been paid. They will then probably make the shipping company liable for that VAT if they import something without such proof. 

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4 hours ago, Vlamgat9 said:

I just dont understand how you enforce it against a seller in, say, Hong Kong who is selling kits from his own website rather than via ebay. Its not as if HMRC are going to be able to go to HK and do anything to that seller. So what’s their plan?

Everything that comes into the UK goes through customs so it’s easy to stop a package on which VAT has not been paid. I’d guess that the UK will tell overseas shipping companies and postal services that they will be liable for the VAT (+penalties most likely) for any package they try to import into the UK which does come with proof of appropriate VAT payment.

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