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VAT nightmare incoming


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https://www.bbc.co.uk/news/business-55734277

 

Starting to affect more photogenic people too now...!

 

But seriously, this is the reason some delivery firms won't deliver to the UK at present, having to return packages and presumably reclaim tax they paid will be costing them. Also for small retailers, having to issue a refund while waiting for a product to be returned which could take weeks can't be good either.

 

This is what the prepaid tax scheme was designed to avoid - we would pay the tax in advance and packages would come through without delay or extra charge. Unfortunately the implementation has been so botched it is leading to the issues we see.

 

To me the simple solution is that the government open a paying portal for small firms and private sellers. These firms can log in and when they want to send a package to the UK they just make a card payment for the tax due and get a unique code which they put on the package. No need for VAT registration, tax accounts etc, save that for the big firms.

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1 hour ago, Black Knight said:

Read the part under the photo of the DPD van

https://www.bbc.co.uk/news/business-55734277

 

Have the rules changed again?

 

Do you mean "Courier companies are adding charges to some deliveries from the EU"?

 

They have been adding handling charges when they collect VAT and duty for HRMC before Brexit, but it only applied to items outside the EU previousely.

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45 minutes ago, Broadway said:

 

Do you mean "Courier companies are adding charges to some deliveries from the EU"?

 

They have been adding handling charges when they collect VAT and duty for HRMC before Brexit, but it only applied to items outside the EU previousely.

No. Previously HMRC said that everything would attract VAT. The £15 allowance had been done away, and it was now zero allowance but in the report it is saying that anything over £39 will be charged

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36 minutes ago, Black Knight said:

No. Previously HMRC said that everything would attract VAT. The £15 allowance had been done away, and it was now zero allowance but in the report it is saying that anything over £39 will be charged

That specifically refers to gifts up to £39. Maybe a small exempt allowance still applies for gifts?

 

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https://www.bbc.co.uk/news/business-55757931

 

UK businesses finding exactly the same issues exporting now - customers being stuck with unexpected bills, returned items are stuck at the border and they will have to pay high costs to get them back.

 

Again the reason why many firms are not shipping to/from Europe at the moment.

 

Small businesses selling direct to consumers are being told to set up delivery warehouses in Europe to distribute their product. I don't think the tax advisors have any comprehension of what a small business is.

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I've had two orders from Lucky Model arrive this week, separately, both shipped in January (one on the 16th!!!), with no indication of RM, HMRC or anyone else paying any attention to them. The change to the current VAT situation will definitely dissuade me from ordering from some overseas vendors in the future, but if you're waiting for stuff that's in the mail now, I'd say there's a good chance it will get through.

 

Jon

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Query?

 

Order from a .co.uk website, pay the appropriate prices which would include VAT, however when the tracking information arrives (as I have in the last couple of days) the fulfilment centre is actually in Holland! At no stage in the order process was any mention made, that this order was not coming from anywhere other than the UK with it being a .co.uk top level domain.

 

I have ordered, directly from Motorola, two mobile phones for myself and my wife valued at over £520. Now, throughout the order process, and email confirmations that I have received (4 of them) not a single one stated that this order was not being delivered or fulfilled from a UK based warehouse, or that it would be coming from The Netherlands.

 

On the final email, I finally received the tracking number, but no courier info. I managed to guess which courier this was and when I tracked my parcel, it stated that the tracking label had been printed in The Netherlands. Cue series of emails to Motorola customer services who confirmed that they do not, and never have had, a UK fulfilment centre, and that all orders would come from a central warehouse in The Netherlands! 

 

Would I or Motorola be the importer? As far as I was aware, I was ordering from a UK based company, not a Dutch based company, and at no stage was I informed otherwise, not until I saw the tracking information, and then queried this with Motorola directly!

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7 minutes ago, treker_ed said:

Query?

 

Order from a .co.uk website, pay the appropriate prices which would include VAT, however when the tracking information arrives (as I have in the last couple of days) the fulfilment centre is actually in Holland! At no stage in the order process was any mention made, that this order was not coming from anywhere other than the UK with it being a .co.uk top level domain.

 

I have ordered, directly from Motorola, two mobile phones for myself and my wife valued at over £520. Now, throughout the order process, and email confirmations that I have received (4 of them) not a single one stated that this order was not being delivered or fulfilled from a UK based warehouse, or that it would be coming from The Netherlands.

 

On the final email, I finally received the tracking number, but no courier info. I managed to guess which courier this was and when I tracked my parcel, it stated that the tracking label had been printed in The Netherlands. Cue series of emails to Motorola customer services who confirmed that they do not, and never have had, a UK fulfilment centre, and that all orders would come from a central warehouse in The Netherlands! 

 

Would I or Motorola be the importer? As far as I was aware, I was ordering from a UK based company, not a Dutch based company, and at no stage was I informed otherwise, not until I saw the tracking information, and then queried this with Motorola directly!

In this case Motorola is the importer and they take care of the hassle that comes with it....pretty common with those kind of company’s...

 

cheers, Jan

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6 hours ago, Jon Bryon said:

I've had two orders from Lucky Model arrive this week, separately, both shipped in January (one on the 16th!!!), with no indication of RM, HMRC or anyone else paying any attention to them. The change to the current VAT situation will definitely dissuade me from ordering from some overseas vendors in the future, but if you're waiting for stuff that's in the mail now, I'd say there's a good chance it will get through.

 

Jon

Was the full price mentioned in the invoice? If so you are lucky 🍀 

 

cheers, Jan

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8 hours ago, treker_ed said:

Query?

Not to be pedantic but did any of the 4 emails say it WAS being dispatched from GB?

Let me know how you get on. I'm in a similar bind. I ordered a bathroom extract fan from screwfix.ie, checked it was in stock in Irish stores first, specifically because all of the online retailers who had it were shipping from GB and I wanted to avoid delays and costs. Lockdown means local collection is impossible or impractical. 

 

Shipped from GB... arrgh. 

 

After I got a delivery notification that it was successfully delivered and signed for in Stoke(?) I emailed requesting a dispatch of a replacement. To be dispatched from one of the Irish stores or else a refund. As of last night its still sorted for export from international hub.

In UK.

After it was listed as exported on 16th. And received in international hub on 19th.

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On 21/01/2021 at 08:52, Tim R-T-C said:

 

To me the simple solution is that the government open a paying portal for small firms and private sellers. These firms can log in and when they want to send a package to the UK they just make a card payment for the tax due and get a unique code which they put on the package. No need for VAT registration, tax accounts etc, save that for the big firms.


 

 

Tim with respect that’s a really daft suggestion to make ...................

 

 

 

 

For a start it’s simple, easy, logical and intelligent. Probably generate little paperwork too. It’s got no chance of being accepted and implemented for all of those good reasons. 
 

:D

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I was wondering that if eBay can set up a VAT collecting service on checkout, why PayPal can’t do that for their customers*?

 

*ie sellers and companies that use PayPal as an option.

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23 hours ago, lasermonkey said:

I was wondering that if eBay can set up a VAT collecting service on checkout, why PayPal can’t do that for their customers*?

 

*ie sellers and companies that use PayPal as an option.

Amazon & eBay operate as an online marketplace allowing buyers and sellers to meet and transact business. They don’t deal with the VAT side of things out of the goodness of their hearts, but because the law requires them to do so because of their status as online marketplaces.

 

Paypal is in a wholly different business. They operate as a facilitator of online financial transactions ie like a bank. They are neither buyer nor seller nor marketplace provider and don’t need to know what the VAT status of the transactions is to allow them to supply their own service. The only amount that worries them is the total transaction value. To even consider taking on the role you suggest would complicate their life no end, and bring additional risks, for no benefit to them unless they decided to charge for it, which clearly no one on here would be willing to pay for.

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Helpfully the BBC have an article on their web site news today which gives real life examples of folk receiving things from outside the UK and explaining why in each case VAT and charges are applied.

 

As some of the comment in the BBC article verges on the Brexit -stay or leave - politics I am not posting a link in the spirit of the no politics rule but I would recommend a read as its informative when it comes to the paragraph in each case of how the rules apply to each transaction or gift received.

 

Posted here for clarity and info only seeking to clear some of the fog surrounding it all - if thats possible of course !  

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Most of the people in those articles are just being shocked at getting routine tax charges.

 

I'm not surprised this has happened - I noticed endless adverts on the radio telling businesses to prepare for Brexit but there was little to no mention of the effects on private consumers

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As others have said, a considerable defeat has perhaps been snatched from the jaws of a potential victory.  But the only way that VAT with the EU would remain simple was to remain within the Customs Union, which would have been tantamount to not leaving the EU because of the strings attached and was expressly ruled out by the UK.

 

I've been digging around the guidance for buyers and sellers on this subject and perhaps this summary might help after 12 pages of comments.  I believe all of this to be currently correct.

  • Overseas sellers are quite within their rights to refuse to supply the UK
  • They are also quite within their rights to impose minimum order values so that they do not have to collect the VAT (see below)
  • To do business in the UK they must register with HMRC and levy and collect VAT up to the limit (see below) and keep records of sales over the limit.  So 2 sets of VAT accounts are needed, home nation and UK.  You can see why that may be unpalatable for smaller sellers.
  • Everywhere outside the UK is now treated the same, except the Channel Islands for whom some differences apply.
  • The old £15 universal minimum VAT limit is gone now that the burden of collection is passed to sellers
  • But "Gifts" up to £39 value are still exempt from VAT but may still attract duty (booze, fags, smellies etc).  But see below about "value".
  • Up to £135 "value" (see below) excluding shipping, overseas sellers are required to levy and collect UK VAT and mark parcels accordingly
    • It is assumed that sellers will pay any VAT due on shipping to their home country tax authorities - where they have purchased it, not you - and include it in the shipping price.
  • The equivalent Euro value agreed with the EU is €155 and it is as yet unclear whether £135 or €155 will be taken as the threshold by sellers in the Eurozone and Border Force, noting that exchange rates fluctuate.
  • Over £135 excluding shipping the VAT is not collected by sellers but will be levied by HMRC through Border Force when the goods arrive in the UK.  Shipping companies are responsible for collecting that VAT from you before goods are released.  They are permitted to charge whatever handling fees they like.  For Royal Mail it is currently about £9 regardless of value.
  • Online marketplaces like eBay are required to levy and collect VAT from buyers on overseas purchases up to the threshold on their platforms.  We might expect to see an increase in eBay fees for the extra admin.  But we might also see smaller sellers having a greater presence on eBay because of the VAT convenience.
  • BUT the tax is levied on parcels/packages, not order values.  Which complicates the issue if your orders are delivered as more than 1 parcel/package.  Each will be treated separately.
  • BIG BUT there is an issue over the definition of "value".  This came up on Rip Off Britain on BBC1 yesterday.  In their case a UK citizen had purchased expensive shoes at a discounted price below the £135 threshold.  However Border Force held that their "value" was greater and levied additional VAT on the full RRP, plus of course the shipper's handling charge.  This was appealed but upheld. 
    • So it seems that the RRP rather than the price actually paid is likely to be taken as the measure of "value" should your parcel be checked
    • Every "mail" parcel (i.e those sent through national postal systems recognised by the UN Universal Postal Union) will be X-rayed at the Heathrow or Coventry postal hubs.  ALL international mail goes to one of these.  So they can see what's inside, and this will often prompt inspection by Border Force.  Freight carried by DHL, FedEx etc is handled differently but might still be subject to Border Force inspection at port of entry.
    • This will have great implications for "gifts", which may be given free but will have VAT charged at their RRP - paid by the gift recipient if the RRP is over £39.  Birthday presents from Granny in Spain etc may get expensive!
    • If you've knowingly bought counterfeit goods and try to play that card for a lower VAT value then your goods are likely to be seized without compensation as counterfeits.
  •  
  • Now, many expensive items like high-brand shoes, designer labels, jewellery, electronics etc are easy targets for inspection as it will usually be obvious if their apparent value and the value on the customs declaration differ appreciably.  For modelling goods that will be more difficult.  Will your average Border Force officer have any clue whether my Panzer Art wheels are valued at their €12 RRP or the €7.50 sale price I paid?  I suggest not, so our goods are perhaps more likely than many others to be taken at face invoice or declaration value.  In fact I suspect that many Border Force staff will be shocked to see how much we do pay for boxes of plastic, resin and brass!!

 

I hope this helps a little.  Glad to be corrected on anything.

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Well I have just sent some second hand parts from a scrap model to Poland as a gift with No Commercial Value. I wonder what the almighty EU will have to say about that.

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5 minutes ago, bentwaters81tfw said:

Well I have just sent some second hand parts from a scrap model to Poland as a gift with No Commercial Value. I wonder what the almighty EU will have to say about that.

 

 

Hide under the bed Benty.  The Taxman cometh :frantic::fight::hanging:

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11 minutes ago, JohnT said:

 

 

Hide under the bed Benty.  The Taxman cometh :frantic::fight::hanging:

Last time they crossed swords with me, it cost them money, and reprint of the VAT regulations.

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1 hour ago, Das Abteilung said:

To do business in the UK they must register with HMRC and levy and collect VAT up to the limit (see below) and keep records of sales over the limit.  So 2 sets of VAT accounts are needed, home nation and UK.  You can see why that may be unpalatable for smaller sellers.

 

Particularly when many may not even be registered for VAT. In the UK firms trading at less than £85,000 don't collect VAT at all, it varies in Europe but many home-brew resin modellers will probably have no VAT registration.

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Just had another thought. No doubt the law of unintended consequences will apply many times over but I guess the criminal fraternity will be turning their minds to how they can scam this one

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1 hour ago, JohnT said:

Just had another thought. No doubt the law of unintended consequences will apply many times over but I guess the criminal fraternity will be turning their minds to how they can scam this one

Poland and somewhere else (Bulgaria?) temporarily suspended VAT-free exports last year because of endemic fraud.  The EU27 are looking at full VAT harmonisation across the EU.  Particularly everyone charging the same in the same way.  At the moment member states have some latitude.

 

1 hour ago, Tim R-T-C said:

Particularly when many may not even be registered for VAT. In the UK firms trading at less than £85,000 don't collect VAT at all, it varies in Europe but many home-brew resin modellers will probably have no VAT registration.

Yes that doesn't seem fair.  Any business with the UK needs registration if youre outside the UK.  A mate of mine has already had to find a new 3D resin supplier as his previous Dutch supplier won't now sell to the UK.  Friul Model have stopped selling through stores and will now only sell direct.  They may regret that choice quickly unless they move onto eBay or Amazon Marketplace.

 

2 hours ago, JohnT said:

Well I have just sent some second hand parts from a scrap model to Poland as a gift with No Commercial Value. I wonder what the almighty EU will have to say about that.

If you send stuff outside the UK you have absolutely no VAT liability to anyone for anything.  Your only responsibility is to complete the CN22 declaration label.  How the receiving country treats it I have no idea.  If you are VAT-registered then it needs to go into the account as zero-rated.  But about 1/3 of the world doesn't use sales tax at all: nowhere us modellers are likely to deal with.

 

I bought some stuff from Poland in November but for various reasons it didn't ship until January.  I got my Polish VAT back as it was over €155, and I was lucky enough not to get stung by HMRC either.  Should have bought more stuff!  But I suspect that was no more than the luck of initial confusion.  The store made the correct declaration. I'm going to buy some more bits from them but under €155.  So we'll see how smoothly that goes.

 

Another emerging thought.  If you buy stuff abroad on holiday (remember those?) then surely there will now be a lot more stuff to go through the Something To Declare channel, and a lot more random searching in Nothing To Declare?  Whether you can get off with it if you can show you paid VAT abroad is an interesting question.  But anything you buy VATex will be fair game.

 

Scotland as a separate country would be fun.  While we're both outside the EU we could do a deal: have our own customs union.  But Nicola might well want the tax on anything bought in the UK to boost the coffers.  If they join the EU again there will be a new Hadrian's Wall customs border.  Or will it be Nicola's Wall.....    I forgot to mention that there are some slightly different VAT rules across the Irish Sea to NI, but as consumers we don't notice.  The publicised delays are for other reasons.

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On 1/26/2021 at 2:43 PM, Tim R-T-C said:

but there was little to no mention of the effects on private consumers

...which I think is a bit naive as consumer. You can bet on 'trickle-down' effects - businesses are not charities.

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