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VAT nightmare incoming


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On 1/31/2021 at 10:29 PM, Das Abteilung said:

 

 

There is a gloriously simple answer if WTO would take if forward.  Sales tax is always paid in the country of the seller.  Period.  No international sales tax wrangles. But about a third of the world doesn't use it. Of course there would be carping from those countries who do (the richer ones) about the perceived advantages gained by those who don't (predominantly poorer ones) or those who levy lesser rates.  But as a basic principle why should the UK get sales tax on things I buy abroad?  Shouldn't it go to that country?  International supply chains will complain, but if I'm BMW building Minis at Cowley then I know I've paid tax on my EU-sourced parts and I only charge VAT on the value I've added in the UK.  This whole international tax and duty system is essentially Victorian, if not Georgian, and is inherently protectionist - and is not fit for the 21st century.  Hobby Horse stabled.........

 

 

I have also wondered the same thing... would be so much simpler for both seller and buyer.

But you've hit the nail on the head - current system is based on centuries of protectionism....

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With deep regret, we (Model Monkey) will no longer accept orders shipped to the United Kingdom due to new unsupportable VAT (value added tax) collection and reporting requirements.

 

We are actively seeking a solution through automation. If an affordable solution can be found, we will resume selling to our valued UK friends "across the pond". Reports indicate that the entire EU will be adopting similar VAT collection and reporting requirements for each of its 28 member nations later this summer. We hope to have an automated solution in place before that happens.  If we can't find an affordable automated solution that works, we will have to stop selling to the EU, too. We simply are not staffed to remain current with, and comply with, 29 individual countries' own taxation laws, taxation collection requirements, and revenue registration and reporting requirements in order to sell in those countries.

 

We are very sorry for any disappointment and thank all of our valued UK customers for their patronage and understanding.

 

Steve Larsen

Owner, Model Monkey LLC

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We are seeing more and more of these boycotts, restricting our access to modelling stuff from international sources; however, it might not be such a bad thing.  I've spoken to a few friends who are now looking into producing in-house for themselves.  I've started to teach myself CAD and have already produced a couple of models.  Perhaps I needed something like this, to make me get off my backside and be a little more entrepreneurial, rather than constantly rely on others for my modelling needs.  I am actually enjoying making my own stuff.

 

Mike

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16 hours ago, Model Monkey said:

Reports indicate that the entire EU will be adopting similar VAT collection and reporting requirements for each of its 28 member nations later this summer.

Small comfort maybe but to comply with the EU requires one of the following options;

Registration in ONE of the EU countries (single market remember) for all of the EU

 

Or,

 

Continue as present and have the customer pay the charge at delivery. 

(Yes its optional).

I've linked the relevant pages in some of my earlier replies as have others. 

 

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I think it was touched on but I wonder how it will work for someone like me. My stash needs to be culled. I was thinking of offering some for sale here on Britmodeller. Now I Iive in Ireland so no problem with the EU but it's most likely many will be of interest to British modellers. 

 

It wouldn't be good to sell something old and second hand only to have it taxed on arrival. 

 

 

items removed - use the buy ands sell forum

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2 hours ago, noelh said:

 

 

It wouldn't be good to sell something old and second hand only to have it taxed on arrival. 

 

 

 

As it's second hand - tax paid - goods, at probably less than retail, it aught to be tax free, but how do you convince HMRC, or their EU equivalent?

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2 minutes ago, bentwaters81tfw said:

As it's second hand - tax paid - goods, at probably less than retail, it aught to be tax free, but how do you convince HMRC, or their EU equivalent?

Exactly unless they open it. I suppose they'd have to believe the customs label. 

 

🤔 I note my list of examples were removed. They were simply illustrative and not for sale. They may in fact end up in landfill. Several have already suffered that fate. 

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1 hour ago, bentwaters81tfw said:

As it's second hand - tax paid - goods, at probably less than retail, it aught to be tax free, but how do you convince HMRC, or their EU equivalent?

That would depend on whether it is obvious, on opening the packaging, that they were indeed used/second hand.  Keeping kits and their boxes in pristine condition, with the intention of selling on later, could backfire on some.  I remember flying back from Singapore - mid 1960's with one of my suitcases stuffed full of Kitmaster locomotive kits.  When stopped at the customs desk and the luggage inspected, the officer looked at the well-worn boxes (evidently they had been sat on the Malay shop shelf for years) and said "where did you get these, Arab Street?" and just let me through with no charge.

So, mark them on the form as used;  open some bags and scuff the boxes.

 

Mike

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7 hours ago, roym said:

Small comfort maybe but to comply with the EU requires one of the following options;

Registration in ONE of the EU countries (single market remember) for all of the EU

 

Or,

 

Continue as present and have the customer pay the charge at delivery. 

(Yes its optional).

I've linked the relevant pages in some of my earlier replies as have others. 

 

Let's hope that as the situation continues to develop, the registration process will be made simpler.  As of this writing, the HMRC registration process is a confusing, evolving mess, especially for a foreign business unfamiliar with UK accounting practices, terminology, and tax collection requirements.  Certainly, IT firms will look at the present situation as an opportunity to bring to market an automated solution a vendor can adopt and implement as part of the checkout process on their website.  Presently, we just don't have that.

 

A UK customer sent this message to me today:

"I  spoke to uk customs and excise 

Just spoke to customs 

You’ll need to go to the 

Ungov [sic] website and look for ukgov EORI number site and register 

You’ll need to fill out a C88 form for customs

The also said look on the border operations site 

He also said if you asked the uk purchaser to fill in a C88 form when they order"

 

We small vendors need a much simpler process than that. Hopefully, IT vendors will view this mess as an opportunity to provide an automated solution we can implement as part of the checkout process on our website. The automated solution, ideally, would:

 

1. register the business with HMRC if not already done (and/or appropriate EU agency when that becomes required)
2. provide accurate information to the correct UK/EU customer at checkout
3. account for and collect the correct amount of VAT

4. produce the proper customs form(s)
5. report the precise amounts to HMRC/EU agency when required
6. transfer the correct amount at the correct time to HMRC/EU agency
7. pay any transaction and currency conversion fees in the correct amount to the correct entity
8. provide a detailed receipt to the vendor to satisfy their own country's taxation reporting requirements
9. integrate with other business tax preparation software (Turbotax, etc.)

 

all done seamlessly, invisibly, painlessly.



Am I hoping for too much?

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Website shows C88 still as EU document. Never used these forms in my day, but looks like a straightforward commercial Customs Entry document.

Not up to speed, being retired, so I can't advise you about requirements. This is the kind of form Royal Mail or Couriers would complete for a shipment from overseas, and charge the Importer for.

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58 minutes ago, Model Monkey said:

 

 

A UK customer sent this message to me today:

"I  spoke to uk customs and excise 

Just spoke to customs 

You’ll need to go to the 

Ungov [sic] website and look for ukgov EORI number site and register 

You’ll need to fill out a C88 form for customs

The also said look on the border operations site 

He also said if you asked the uk purchaser to fill in a C88 form when they order"

 

Bless.


Given that an EORI number application requires your UK VAT number, your UK national insurance number, your UK taxpayer reference and UK Government Gateway ID code, I'm sure it will be a breeze to get 🤔

 

Some people seem to think it is so simple and that overseas vendors are just being lazy.

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You would also need an EORI number for the remaining 27 EU countries. 
If you pick wisely, that will however subsequently be valid for the entire EU.
Basically, you will need an agent in the EU, and an agent in the UK.
There are several larger stores and importers that may be an option to look into.

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On 2/6/2021 at 1:10 AM, Tim R-T-C said:

Bless.


Given that an EORI number application requires your UK VAT number, your UK national insurance number, your UK taxpayer reference and UK Government Gateway ID code, I'm sure it will be a breeze to get 🤔

 

Some people seem to think it is so simple and that overseas vendors are just being lazy.

 

2 hours ago, alt-92 said:

You would also need an EORI number for the remaining 27 EU countries. 
If you pick wisely, that will however subsequently be valid for the entire EU.
Basically, you will need an agent in the EU, and an agent in the UK.
There are several larger stores and importers that may be an option to look into.

 EORI numbers are for importing/exporting goods at/in your own responsibility, i.e. you are the importer/exporter. If you send items through the post the postal service becomes the importer/exporter - basically  you transfer the responsibility of shipping over to the postal service. I do not think an EORI number is needed when selling to individual customers and shipping small parcels by post.

 

To be honest though, applying for and getting a UK VAT number was the easiest part of the process so far. Yes, filling in the form takes seemingly forever but I didn't encounter anything insurmountable. HMRC will send you a questionnaire in reply to the form, containing a few more questions as you are not UK based. After returning this I relatively quickly received my VAT number.

 

J

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I've just received my first overseas parcel since January 1st. From China and admittedly from Ebay. I was charged 20% VAT by Ebay. Parcel arrived quickly, shipping info said it was despatched by the seller on January 28th. From the labels it looks like it was shipped to a UK distribution warehouse and from there by Royal Mail to me. No additional requests for money and the address label stated my name, address and a UK Company VAT Identier Number and the word PAID.

 

So from this the Ebay purchase route looks to work OK.

 

P

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Latest news from Hannants, from their e-mail newsletter:

Quote

Message;  There are still problems with sending parcels to the EU. There are big delays in the postal system which have been caused by the need to check the paperwork AND the 100"s of thousands of parcels already in it.

1000"s of parcels are being returned to the UK senders before they even leave the country because something is wrong with the paperwork.

When the parcel arrives in the EU country of destination the authorities are checking every parcel and rejecting and returning anything which does not conform to their new rules. Hence to avoid returns from Europe the UK carriers are checking the paperwork of every single parcel before it even gets to Europe.

So far we have despatched about 160 parcels to the shops we supply in Europe but as of yesterday less than 50 have been delivered. All have been checked in England and nothing was wrong and they have all left the country. This tells us that Parcelforce and our updated IT systems are working ok.


There are also big delays for goods coming in from the EU because the EU authorities are checking the paperwork before they leave. This is compounded by the lack of information that is available and because different countries are asking for different information. For example we usually have 2 deliveries a month from Eduard but our order with the new items which normally arrives about the 25th of the month is not here yet. Our second order is now on the way as well. Our new and re-stock of Eduard has therefore been delayed. Likewise our delivery of new and re-stocked Special Hobby and Czech Master Kits has also been delayed. Czech Post has stopped shipping to the UK any many of our suppliers use them so we cannot re-stock many Czech ranges at the moment.


DPD have now worked out what their problems are. It was an issue with uploading the EORI numbers and a problem with some customers using commas in their delivery address"s that should not be there and corrupt the system. These should both be quite easy to fix.

Royal Mail have not fixed the error that stops them accepting parcels containing more than 20 items. (one page full it will not go to 2 pages) They do not seem in a hurry to try and fix it. As Royal Mail and Parcelforce are much the same company and Parcelforce do not not have this problem it is rather baffling.

We are sorry but we still cannot start taking orders knowing that these delays and problems exist and are going to have to wait a bit longer before we can re-open for EU orders.

We do not know exactly when we will be able to re-start sales but we are hopeful it will be later in this coming week. We will let you know as soon as it happens.

Our company policy is to reply to all emails the day they arrive but we are no longer able to reply to all the emails we are receiving asking us when we will open for EU orders. The Home page message has the latest information.
 

 

Mike.

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48 minutes ago, roym said:

These are not new rules. These are existing rules for 3rd countries outside the Single Market and/or Customs union.

Another Newsflash for Hannants,  the EU did not vote to leave the UK. 

Have you considered that it was an autocorrect error or accidental spelling and not an intentional error regarding the implementation of the post Brexit rules. These things do happen, even to companies such as Hannants. Not the sort of thing that would be picked in in a spell check or grammar check before being posted. 

 

In addition, whilst they may be existing rules, most British companies have never used these rules as prior to 01/01/2021 they would have used the same rules as the rest of the EU, as you well know. It will take time to get used to the new paperwork requirements. Which some courier companies seem to be ok with and others not. 

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As before, this thread is for the discussion regarding navigating through the VAT and import issues in order to determine a pathway. It is not for political comments and needling. One member is now on a holiday for being unable to grasp that fact and then arguing with the Mod team after being asked to refrain. No more please.

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On 1/24/2021 at 9:17 AM, roym said:

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.

 

Screwfix price is all in Roy, Vat is on the invoice or should be.  I had some stuff delivered from them last week, Waited ages though and some crowd called Wiggle with no extra costs.

 

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On 2/5/2021 at 11:11 AM, noelh said:

I think it was touched on but I wonder how it will work for someone like me. My stash needs to be culled. I was thinking of offering some for sale here on Britmodeller. Now I Iive in Ireland so no problem with the EU but it's most likely many will be of interest to British modellers. 

 

It wouldn't be good to sell something old and second hand only to have it taxed on arrival. 

 

 

items removed - use the buy ands sell forum

Same here, Perhaps Paul Walsh in Dublin or Maybe, just Maybe Marks Models  or Stillorglin model buy n sell lark at some stage.

 

Fraid Selling any thing Model Related now to the UK is Kaput. Just left it too late myself.

 

Now what to do with all those Corgi Lightnings I have..... 

 

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On 1/31/2021 at 12:59 PM, Duncan B said:

 

The chances are that your Trader didn't get that stock from the UK Importer but got it from another source at a cheaper Trade price or because the UK Importer won't deal with non 'Bricks and mortar' Traders** (see below).

 

One of the few pieces of actual information that was on the UK. Gov website earlier last year was that UK businesses (that import and export to the EU) would need to get an EORI number if they didn't already have one or if the one they had didn't start with "GB". Now the EU doesn't recognise the "GB" EORI numbers, you couldn't make this up. Honestly, it feels like I'm living in some sort of parallel world where the rules are written by the script writers of 1970's British Farce. I now fully expect the PM's trousers are going to fall down mid Press conference every time I see him on TV :)

 

I have been holding off buying stock in from my European Suppliers since the middle of December but have recently just made a small order to test the waters. I am not VAT registered and all the information on the UKGov website is aimed at businesses that are VAT registered so we'll see what happens at the border. What I expect to happen is that it will be treated in a similar manner to things I have previously imported from the Far East etc in that the Courier will request payment of the VAT due plus a handling fee before delivery. What I'm not sure about is whether there will be any tariffs applied as the "Point of Origin" for most Brands of plastic kits these days is from outside of the EU in the first instance. The results of this "test piece" could have a significant impact on the stock I can carry moving forward. One thing though that is obvious, the shipping has doubled!

As an aside, the reason I have to import some stock from outside the UK is that many of the UK Importers won't deal with my business because I don't have a 'bricks and mortar' shop**, how very quaintly last Century!

 

Duncan B

"that it will be treated in a similar manner to things I have previously imported from the Far East etc in that the Courier will request payment of the VAT due plus a handling fee before delivery."

 

Exactly so why does not the others say from the US operate the same way, the postie rocks up and ask for the dosh.

 

Happens here right now, I have cleared 100's of customs entries into Ireland this week helping out our land dept.  Lots of Consignees not Registered EORI wise, Tough then, Stick NR (not registered)  in the Entry and they pay up front before delivery , Small delay but works.

 

 

 

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21 minutes ago, George Norman said:

"...Exactly so why does not the others say from the US operate the same way, the postie rocks up and ask for the dosh..."

 

 

 

 

Great question.  The US does not have VAT.  US customers typically pay no import tax for models received from anywhere outside the US.  The US Postal System collects nothing.  

 

Local town, city and/or state "sales tax" may apply for US customers purchasing products from another state within the US or from within their own state.  State laws vary.  But normally, for small businesses selling to a customer in another state, no sales tax is required to be collected due to established sales thresholds.  For example, if vendor in state A sells and ships to a customer in state B, if the vendor does not sell above an established annual threshold to state B (typically $200k USD) or have a physical presence in state B, typically no sales tax is collected by the vendor and no sales tax is paid by the customer.

 

However, if vendor in state A sells to a customer in the vendor's same state A, the vendor does collect sales tax which is then reported and passed on to the appropriate state agency, normally monthly.

 

This means that small US vendors (and the US Postal Service) typically have no VAT collection processes or mechanisms in place because they never have been required to collect and report it. 

 

Until this month, when I as a US-based vendor shipped a product to a customer in the UK, I bought postage online, I typed in the cost of the model(s) and an HS customs code for scale models (950320) for the customs label, then printed the label all from my desk.  The label was then fixed to the package and off it went to the UK, complete with tracking number.  It was amazingly easy and fast.  VAT was completely invisible to me, all handled by HMRC and Royal Mail based on the information on the customs label.

 

Occasionally, a customer in the UK, stung by the cost of VAT and the Royal Mail handling fee, refused to pay those costs and rejected the package.  Royal Mail returned the package to me in the US at no cost to me.  The whole process was as painless as it could be for a US vendor.

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I have to take issue with this comment from Hannants. 

 

'There are also big delays for goods coming in from the EU because the EU authorities are checking the paperwork before they leave. This is compounded by the lack of information that is available'

 

While it's been portrayed this way for certain reasons. There is in fact no one monotheistic EU authority checking paperwork. It's 27 individual sovereign country's authorities trying to work out this new situation. To be fair that's made clear later when they discuss how the Czech Post has stopped delivery to UK.  The other 26 countries have their own version of the rules. 

 

But it says something that it's not just EU countries who are having a problem sending items to the UK. Even vendors in the US who had minimal problems previously. 

 

It's a bit of a mess, a mess that will be resolved in one form or another eventually. 

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On 1/31/2021 at 12:59 PM, Duncan B said:

 

 

I have been holding off buying stock in from my European Suppliers since the middle of December but have recently just made a small order to test the waters. I am not VAT registered and all the information on the UKGov website is aimed at businesses that are VAT registered so we'll see what happens at the border. What I expect to happen is that it will be treated in a similar manner to things I have previously imported from the Far East etc in that the Courier will request payment of the VAT due plus a handling fee before delivery. What I'm not sure about is whether there will be any tariffs applied as the "Point of Origin" for most Brands of plastic kits these days is from outside of the EU in the first instance. The results of this "test piece" could have a significant impact on the stock I can carry moving forward. One thing though that is obvious, the shipping has doubled!

 

 

Duncan B

An update on my little test import, as I said above I'm not VAT registered but do have an EORI number which might be the situation many of the smaller UK Traders are in.

 

I put in orders (valued at £500ish) with 2 different Suppliers in Germany, both already had my EORI number but I only reminded one of them about it and made it more obvious by altering my address to include it. The other I left as per my previous orders from last year. The one that I reminded sent their consignment ex VAT and it arrived within a few days. I had expected that I'd be asked to pay the VAT by the Courier but it came straight through (so I will declare the VAT to HMRC myself using the scheme set up for this purpose). The other Supplier charged me VAT at point of sale  as they did previously, although their website is not adding VAT to UK orders automatically. That order is yet to arrive so we shall see what happens when it is delivered, it shouldn't attract another VAT charge as it's already been paid but we shall see.

Reading through the Gov website yet again to try to understand how it's meant to work for non VAT registered businesses (which isn't helped by the fact that they still have out of date pages displayed that contradict each other) I think that both Suppliers have got it correct with the regards to the information that I supplied them. 

 

Duncan B

 

p.s. Later today I received an email forwarded from my Accountant to me with the information from HMRC which includes the latest information and this topic, links to Youtube videos and some other stuff. I will see if I can get the links posted on here shortly. 

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There have been a few unwarranted posts in this thread causing moderator intervention and at least one holiday.

 

Please keep to topic and be respectful. 

Edited by Mike
Cos you lot don't listen unless it's in red.
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