VAT nightmare incoming

[roym]

42 minutes ago, Duncan B said:

 

If you're just a private individual buying items online I agree, however if you are trying to keep your head above water running a small business then it's not just about having some patience as the Bank Manager and Suppliers won't take patience in lieu of payments. This is causing many small businesses serious problems and sleepless nights. That in turn will trickle down to the private individuals as they soon discover that the resin set they really wanted is no longer available to them.

 

 

I feel your pain, I don't suppose Graham's suggestion about having some patience is much comfort to you? (sorry Graham but your comment was a bit short sighted)

 

 

Yes it will mean being registered in every Country you sell into and then keeping a set of Accounts for every Country (my Accountant is already rubbing her hands in delight), the paperwork and costs are going to spiral which for a small Business will mean a tough choice between continuing to sell to each Country or to drop the less profitable markets. 

 

Duncan B

Are you sure on that?

My reading is that when trading into the EU the trader only needs to register in the EU once.

 

"This scheme allows suppliers importing goods into the EU to declare and pay the VAT
due on those goods by submission of a monthly return via the IOSS in the Member
State where they have registered for the scheme. Where the IOSS is used, the
supplier will charge VAT to the customer at the time of the supply and the goods will
not be subject to VAT at the time of importation."

 

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part10-special-schemes/vat-ecommerce-rules-1-july-2021/vat-ecommerce-rules-1-july-2021.pdf&ved=2ahUKEwjU7pqRhYfuAhWionEKHcrLDBIQFjABegQIBxAF&usg=AOvVaw16l_6fW0_Nal-k64lXsgoZ

[Graham Boak]

I agree that I was only speaking as a private individual, speaking to the majority of the membership that are just that.  However I was aware that small businessmen would be in a different position, but felt they had already aired their problems and I was not in any position to add to comments they had already made better than I could.

 

Beyond that would have meant straying too near politics for this forum.

 

 

[Tim R-T-C]

Ironically if this all does work, it will actually be easier to import - avoiding the handling fees and delays and the uncertainty over final price that have put me off ordering from Japan etc.

[noelh]

1 hour ago, JohnT said:

 

God knows what misery this will bring short medium and long term to small businesses given the global markets we live in. It could well be the final straw for many who will close down. What folks need understand is that by itself it’s manageable but arrives on top of the existing mountain of paperwork.  For many it means more man hours working but not earning a cent. 

Indeed the final straw. Collecting VAT at source may suit the consumer as in no nasty bill on delivery and it may suit the big online operator but as you say it's another layer of cost for the small business. However for you small retailers in the UK. I found this:

 

 

"Summary of VAT on UK online orders to Ireland from July 2021

On orders less than €150 –

Online marketplaces ( eg Amazon) facilitating sales to Irish/EU consumers will become responsible for the VAT on third party supplier’s behalf too . So the Irish VAT will be taken care of at the point of sale by the marketplace provider and there should be no need to worry about any unpaid VAT on Amazon orders under €150.

Other online retailers in the UK can opt to charge Irish VAT or no VAT at all. If No VAT is charged at checkout it will mean the customer will have to pay it on delivery. (If it is spotted )

Orders delivered from the UK greater than €150 – Rules are the same as pre July.

Online retailers selling from the UK to Ireland can choose to collect Irish VAT at checkout or leave it for the customer to pay on delivery."

 

I'm assuming if that's correct and if you substitute Ireland for EU, the same rules apply. Advise the customer that VAT may be charged on delivery. So no need to register if you're a small retailer.

 

As for those exporting into  Britain could the same rules apply? 

 

https://www.moneyguideireland.com/vat-and-online-shopping-in-the-uk-after-brexit.html

Edited January 6, 2021 by noelh

[Duncan B]

23 hours ago, roym said:

Are you sure on that?

My reading is that when trading into the EU the trader only needs to register in the EU once.

 

"This scheme allows suppliers importing goods into the EU to declare and pay the VAT
due on those goods by submission of a monthly return via the IOSS in the Member
State where they have registered for the scheme. Where the IOSS is used, the
supplier will charge VAT to the customer at the time of the supply and the goods will
not be subject to VAT at the time of importation."

 

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part10-special-schemes/vat-ecommerce-rules-1-july-2021/vat-ecommerce-rules-1-july-2021.pdf&ved=2ahUKEwjU7pqRhYfuAhWionEKHcrLDBIQFjABegQIBxAF&usg=AOvVaw16l_6fW0_Nal-k64lXsgoZ

 

"In the Member State where they have registered for the scheme", So if I want to sell to Sweden I have to register in Sweden, If I want to sell in Germany same and so on.  I stand corrected on that, thanks.

 

As an aside Linden Hill have joined the list of Companies no longer selling into the UK. It's just been announced on their website.

 

Duncan B

[JeffreyK]

No, that's not correct. It's called the ""import One Stop Shop" for the very reason that you only need to register on ONE EU state and do all your necessary paperwork and payments with that one registration, for all business with all EU countries.

Two significant facts:

- for a non-EU business in order to register for the scheme you need to appoint an intermediate agent located in the EU country you chose for registration. That intermediate then has to handle all the correspondence with the tax/VAT office one a month (!).

- there's no obligation to use this scheme. You can send your products just as you do now, the postal services will charge VAT and a handling fee as they do now.

 

Details in this paragraph: 

 3. I am a business established outside the EU and I sell low value goods to customers in the EU exclusively via my own online shop. What do I need to do?

 

From 1 July 2021, all commercial goods imported into the EU will be subject to VAT. You can use the simplification to collect the VAT on sales relating to low value goods and register in the IOSS in one of the EU Member States (online registration using an EU established intermediary36 – see sections 4.2.4 and 4.2.5 and the VAT OSS portal)

 

If you decide to register in the IOSS, you will only have to register in one of the EU Member States and you will be able to sell in all 27 EU Member States. You will need to appoint an intermediary who will register you in the IOSS in the Member State where he is established. The IOSS VAT identification number issued by the Member State where you registered for IOSS (Member State of Identification) is to be used to declare all of your IOSS sales of low value goods to customers in all the EU Member States.

 

At the moment of sale, you will need to charge to the customer the VAT rate applicable to the goods in the Member State to which those goods will be dispatched. When you send the goods to the customer in the EU, it is advisable to securely transmit your IOSS VAT identification number to the person who is responsible for the declaration of the goods for release for free circulation in the EU (e.g. postal operator, express carrier, customs agent) so that the VAT is not paid again to customs in the EU when the goods are imported. You should not transmit this IOSS VAT identification number to other parties than those involved in the declaration of the goods for release for free circulation. The customs authorities will be performing their duties to ensure compliance with the customs legislation and other legislation governing movement of goods through borders without assessing or collecting any VAT.

 

Each month, your intermediary who registered you in IOSS will need to submit an IOSS VAT return by the end of the month following the reporting month (e.g. for sales in September, the IOSS VAT return is to be submitted by 31 October). The IOSS VAT return contains all the IOSS sales of low value goods in the EU broken down per Member State of destination and per VAT rate and shows the total VAT due in the EU. Similarly, by the end of the month following the reporting month the intermediary needs to pay to the Member State of identification the total VAT amount as declared in the IOSS VAT return (e.g. for sales in September, payment to be done by 31 October).

 

If you do not register in the IOSS, the competent authorities will collect VAT upon importation of the low value goods. The customer in the EU will only receive the goods after the VAT has been paid. It could be that the representative submitting the customs declaration on behalf of the customer (e.g. postal operators or express carriers) will also charge an additional clearance fee 37 to the customer. As the customers in the EU are used to a price that includes VAT, the payment of additional fees at the time of importation might lead to the customer refusing the package/parcel.

 

Found in this lengthy article: https://ec.europa.eu/taxation_customs/sites/taxation/files/vatecommerceexplanatory_notes_30092020.pdf

 

As with the UK VAT scheme, paying VAT at point of sale will be beneficial for the customer as the low value threshold will be done away with - VAT would be paid only on the good value and there won't be a postal service handling charge. The big drawback is that you have to appoint an intermediate in a EU country so unless you have a really good friend or family you'd probably have to fork out a healthy fee for a hired agent to do that kind of work. Probably not worth doing in that case.

 

Jeffrey

[alt-92]

Similar rules also apply to online media services - such as running a subscription based forum, or streaming media outlet. 

And why the likes of Spotify, Apple and such are registered in the EU.
 

[Black Knight]

The last couple of days I've bought a few items from China via ebay

On the 'check-out' page I've had to select to pay by paypal, something they introduced last autumn or so

One thing I noticed is that the price to be paid is sometimes lower than what it was in my 'basket'

Also, under the price  is 'UK VAT added to price.'

When I checked this out ebay is collecting and will be paying the required VAT

 

[Duncan B]

Thanks for the correction and the details @JeffreyK with regards to the EU VAT position. It looks like waiting until after July 1st before resuming sales to the EU might be a better option for smaller UK Businesses?

 

Duncan B

[bentwaters81tfw]

It's made gutter press mainstream media.

https://www.dailymail.co.uk/news/article-9121359/British-companies-cross-channel-trade-Brexit-red-tape.html

[roym]

On 1/7/2021 at 12:49 PM, bentwaters81tfw said:

It's made gutter press...

You were right the first time.

 

Slightly less histrionics and a better explanation of hows, whys and effects here.

https://www.rte.ie/news/2021/0108/1188595-tony-connelly-brexit/

[Stephen]

I've just seen on FB last night that the following companies are suspending direct sales to UK customers due to post brexit VAT 

 

Flying Leathernecks

Fightertown Decals

Reid Air Publications

Sprue Brothers Models

Mr Paint

 

[Black Knight]

On 07/01/2021 at 08:36, Black Knight said:

The last couple of days I've bought a few items from China via ebay

On the 'check-out' page I've had to select to pay by paypal, something they introduced last autumn or so

One thing I noticed is that the price to be paid is sometimes lower than what it was in my 'basket'

Also, under the price  is 'UK VAT added to price.'

When I checked this out ebay is collecting and will be paying the required VAT

 

So far all but one of my orders from China/ outside UK have arrived without any extras being charged on them. The one not arrived is not due till next week.

If this is the way then its going to increase business for ebay, and maybe Amazon(?)

I've noticed on ebay an increase of sellers from Eu countries selling and willing to send to the UK. Presumably because ebay is dealing with the VAT etc for them.

[ckw]

1 hour ago, Stephen said:

I've just seen on FB last night that the following companies are suspending direct sales to UK customers due to post brexit VAT 

 

Flying Leathernecks

Fightertown Decals

Reid Air Publications

Sprue Brothers Models

Mr Paint

Well at least that's sorted a problem for me ... I've been hemming and hawing over whether to Mr Paint for a couple of weeks now. At least the enamels I currently use are UK sourced (though I gather there may be an issue with tinlet supplies )

 

Cheers

 

Colin

[Jabba]

4 hours ago, Stephen said:

I've just seen on FB last night that the following companies are suspending direct sales to UK customers due to post brexit VAT 

 

Flying Leathernecks

Fightertown Decals

Reid Air Publications

Sprue Brothers Models

Mr Paint

 

Luckily I bought a decal sheet from Sprue Brothers the other day which is on its way to me.

[IanHx]

On 1/7/2021 at 3:24 AM, JeffreyK said:

No, that's not correct. It's called the ""import One Stop Shop" for the very reason that you only need to register on ONE EU state and do all your necessary paperwork and payments with that one registration, for all business with all EU countries.

Two significant facts:

- for a non-EU business in order to register for the scheme you need to appoint an intermediate agent located in the EU country you chose for registration. That intermediate then has to handle all the correspondence with the tax/VAT office one a month (!).

- there's no obligation to use this scheme. You can send your products just as you do now, the postal services will charge VAT and a handling fee as they do now.

 

Details in this paragraph: 

 3. I am a business established outside the EU and I sell low value goods to customers in the EU exclusively via my own online shop. What do I need to do?

 

From 1 July 2021, all commercial goods imported into the EU will be subject to VAT. You can use the simplification to collect the VAT on sales relating to low value goods and register in the IOSS in one of the EU Member States (online registration using an EU established intermediary36 – see sections 4.2.4 and 4.2.5 and the VAT OSS portal)

 

If you decide to register in the IOSS, you will only have to register in one of the EU Member States and you will be able to sell in all 27 EU Member States. You will need to appoint an intermediary who will register you in the IOSS in the Member State where he is established. The IOSS VAT identification number issued by the Member State where you registered for IOSS (Member State of Identification) is to be used to declare all of your IOSS sales of low value goods to customers in all the EU Member States.

 

At the moment of sale, you will need to charge to the customer the VAT rate applicable to the goods in the Member State to which those goods will be dispatched. When you send the goods to the customer in the EU, it is advisable to securely transmit your IOSS VAT identification number to the person who is responsible for the declaration of the goods for release for free circulation in the EU (e.g. postal operator, express carrier, customs agent) so that the VAT is not paid again to customs in the EU when the goods are imported. You should not transmit this IOSS VAT identification number to other parties than those involved in the declaration of the goods for release for free circulation. The customs authorities will be performing their duties to ensure compliance with the customs legislation and other legislation governing movement of goods through borders without assessing or collecting any VAT.

 

Each month, your intermediary who registered you in IOSS will need to submit an IOSS VAT return by the end of the month following the reporting month (e.g. for sales in September, the IOSS VAT return is to be submitted by 31 October). The IOSS VAT return contains all the IOSS sales of low value goods in the EU broken down per Member State of destination and per VAT rate and shows the total VAT due in the EU. Similarly, by the end of the month following the reporting month the intermediary needs to pay to the Member State of identification the total VAT amount as declared in the IOSS VAT return (e.g. for sales in September, payment to be done by 31 October).

 

If you do not register in the IOSS, the competent authorities will collect VAT upon importation of the low value goods. The customer in the EU will only receive the goods after the VAT has been paid. It could be that the representative submitting the customs declaration on behalf of the customer (e.g. postal operators or express carriers) will also charge an additional clearance fee 37 to the customer. As the customers in the EU are used to a price that includes VAT, the payment of additional fees at the time of importation might lead to the customer refusing the package/parcel.

 

Found in this lengthy article: https://ec.europa.eu/taxation_customs/sites/taxation/files/vatecommerceexplanatory_notes_30092020.pdf

 

As with the UK VAT scheme, paying VAT at point of sale will be beneficial for the customer as the low value threshold will be done away with - VAT would be paid only on the good value and there won't be a postal service handling charge. The big drawback is that you have to appoint an intermediate in a EU country so unless you have a really good friend or family you'd probably have to fork out a healthy fee for a hired agent to do that kind of work. Probably not worth doing in that case.

 

Jeffrey

 

 

...  and the problem with having to use an intermediary is that they require a fiscal guarantee -  I've heard  values as much as 3 months traded goods worth being mentioned.  Some countries in the EU may simply become unsellable to.

[Jon Bryon]

6 hours ago, Stephen said:

I've just seen on FB last night that the following companies are suspending direct sales to UK customers due to post brexit VAT 

 

Flying Leathernecks

Fightertown Decals

Reid Air Publications

Sprue Brothers Models

Mr Paint

 

 

I'm quite surprised there's a significant market for buying direct from the USA to the UK. In my experience the postage charges are pretty horrendous plus the pound has been weak against the dollar for a long time. For example, I did order some OOP Two Bobs decals which arrived this week from the USA. Postage was $14.50 - for a single decal sheet! I've wanted to order some Sierra Hotel resin A-10 intakes. These are not large and cost $15, but postage to the UK is $25. Werner Wings, Lone Star Models and Nautilus Models have all been similar experiences for me and so I've only ordered from the USA in recent years as a last resort.

 

There are exceptions, such as Caracal, but in general companies that distribute via outlets like Hannants seem to be much better value.

 

Jon

[janneman36]

2 minutes ago, Jon Bryon said:

 

I'm quite surprised there's a significant market for buying direct from the USA to the UK. In my experience the postage charges are pretty horrendous plus the pound has been weak against the dollar for a long time. For example, I did order some OOP Two Bobs decals which arrived this week from the USA. Postage was $14.50 - for a single decal sheet! I've wanted to order some Sierra Hotel resin A-10 intakes. These are not large and cost $15, but postage to the UK is $25. Werner Wings, Lone Star Models and Nautilus Models have all been similar experiences for me and so I've only ordered from the USA in recent years as a last resort.

 

There are exceptions, such as Caracal, but in general companies that distribute via outlets like Hannants seem to be much better value.

 

Jon

You were talking about Lonestar models and i couldn’t resist as he at the moment is only doing order shipments which are at least fifty dollars and ads a 10 dollar packing/shippingfee on those so it will be horrendously priced when you order something and import it ....

Some weeks ago I saw that he had the Privateer 1/72 ex cobra molds conversion for the matchbox and it costed a whopping 110 dollar🤔 So about 81 pounds...I bought mine as a cobra release a few years ago  in current currency for 48 pounds.....I am about to rename it in Looney models ...

But I am drifting off....I ordered something in the UK again last week but this is still under 22 euro threshold and it shoul be okay for us in the Netherlands ...everything above will be taxed....

Some sellers adjust their selling price and deduct the tax and others don’t..😒

 

cheers, Jan

[noelh]

No doubt it will all settle down in due course. But my wife is quite miffed. She ordered a pair of boots from Clarks.ie but in reality it was .co.uk. Their courier DPD are having a meltdown and they returned them to Clarks. She was refunded but well no woman likes to lose out on a pair of boots. No doubt Clarks don't want to lose sales either. In normal times she'd simply have gone to the local Clarks shop. But apparently boots are non essential. 

What a mess. 

Edited January 17, 2021 by noelh

[Skodadriver]

For any fellow airliner modellers following this thread, Authentic Airliners have just imposed a minimum value of €155 on UK orders, presumably as an alternative to the registration nonsense. At least they are prepared to keep selling to the UK.

 

[Duncan B]

10 hours ago, Skodadriver said:

For any fellow airliner modellers following this thread, Authentic Airliners have just imposed a minimum value of €155 on UK orders, presumably as an alternative to the registration nonsense. At least they are prepared to keep selling to the UK.

 

I know it won't suit everyone but this is what I suggested might happen to get around it. Maybe Clubs and friends will look to making bulk orders to get to the minimum order values in future?

 

Duncan B

[Stephen]

On 1/16/2021 at 2:52 PM, ckw said:

Well at least that's sorted a problem for me ... I've been hemming and hawing over whether to Mr Paint for a couple of weeks now. At least the enamels I currently use are UK sourced (though I gather there may be an issue with tinlet supplies )

 

Cheers

 

Colin

You can get Mr Paint from hmhobbies.co.uk. Excellent service.

[ckw]

32 minutes ago, Stephen said:

You can get Mr Paint from hmhobbies.co.uk. Excellent service

But will HMhobbies be able to continue stocking Mr Paint? Seems unclear at the moment.

 

Cheers

 

Colin

[Stephen]

Just now, ckw said:

But will HMhobbies be able to continue stocking Mr Paint? Seems unclear at the moment.

 

Cheers

 

Colin

Well, on FB Mr Paint directed customers to hmhobbies.

[alt-92]

On 1/16/2021 at 9:36 PM, IanHx said:

Some countries in the EU may simply become unsellable to.

It's none or all.

Quote

If you decide to register in the IOSS, you will only have to register in one of the EU Member States and you will be able to sell in all 27 EU Member States.