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VAT nightmare incoming


Vlamgat9
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23 minutes ago, nheather said:

I was looking at AliExpress today for some bits for my Radio Control hobby.

 

I don't buy outside the UK that often and when I do it is for items costing less than £15 or where I think the risk of import taxes and courier admin fees is worth it.

 

So today I went to place an order that was less than £15 and was puzzled that the shopping cart came to more than I was expecting and then I noticed a line all 'TAX' with an information icon next to it. The icon explained that they are now required to collect UK VAT and pass it onto the UK government.

 

Now this is good and bad news.

 

Bad News

 

  1. For people like me with pur5chases less than £15.  There shouldn't be any import taxes on that because it is below the threshold but now there are.

 

There are several threads on this subject, but I'm pretty sure the £15 threshold has now gone and VAT is liable from £0+.

 

Jon

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I'm going to take a positive from this.

 

One thing that has always put me off ordering from abroad were the unspecified and often disproportionate courier handling fees.  I never had any problem paying the VAT.  So if this means that I can buy something from China or the US, be charged the VAT and then have it come through customs without any further charges then that is a win for me.  I suspect there will be teething problems to begin with but overall that is a positive.

 

Less good was that I used to buy accessories for my radio control hobby for under £15 without any VAT - will have to pay now but it is £3 at the most.

 

Cheers,

 

Nigel 

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My purchases from Japan now come without a delivery charge which is a good thing.

 

Regards

Robert

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1 hour ago, Robert said:

My purchases from Japan now come without a delivery charge which is a good thing.

 

Regards

Robert

 

Japan - that's a thought - I've seen some great prices from Japanese sellers in the past but have never used them for fear of the courier admin fees.

 

Cheers,

 

Nigel

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On 07/03/2021 at 18:48, nheather said:

I was looking at AliExpress today for some bits for my Radio Control hobby.

 

I don't buy outside the UK that often and when I do it is for items costing less than £15 or where I think the risk of import taxes and courier admin fees is worth it.

 

So today I went to place an order that was less than £15 and was puzzled that the shopping cart came to more than I was expecting and then I noticed a line all 'TAX' with an information icon next to it. The icon explained that they are now required to collect UK VAT and pass it onto the UK government.

 

Now this is good and bad news.

 

Bad News

 

  1. For people like me with pur5chases less than £15.  There shouldn't be any import taxes on that because it is below the threshold but now there are.
  2. For people that have previously gambled that their purchase slips past the eyes of customs.

 

Good News

 

  1. You can now buy bigger items (greater than £15) safe in the knowledge that you will pay VAT (which I have never had a problem with) but that you shouldn't have to pay the nasty courier admin charges (which I do have a problem with)

 

Be interesting to see

 

  1. How widely this is rolled out
  2. Whether the couriers still find a way to charge you even though you have pre-paid all the taxes due.

 

Cheers,

 

Nigel

 

There is no £15 threshold, that was abolished on the 1st of January.

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38 minutes ago, iainpeden said:

I think this means that you will not be charged for anything under £135.

 

https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

Not exactly. The new rules mean that any seller outside the UK who sells goods worth less than £135 directly to a UK customer (i.e. not using an online marketplace such as eBay or Amazon) is required to register with HMRC, collect the UK VAT and account for it. You can work out for yourself how reasonable it is to expect a small business in Ukraine, Israel, Mexico or wherever to go through the rigmarole of registering with HMRC, submitting quarterly VAT returns and paying money to the UK Government.

 

Unsurprisingly several businesses who are aware of the new rules are now refusing to sell to UK customers (Drawdecal is one example I know of) and others have imposed a minimum order limit equivalent to £135 so that the customer is responsible for the VAT. Authentic Airliners and Airline Hobby Supplies are in this category.

 

The big question is how this nonsense is going to be policed and nobody seems to know the answer although the likelihood is that Royal Mail will collect any unpaid duties as they do at present. 

 

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6 hours ago, iainpeden said:

I think this means that you will not be charged for anything under £135.

 

https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

 

 

3 weeks hold for any VAT/Duty payment due?

Lucky you. One week over here.

And no freebies below 135 quid either.

 

Maybe we should go for a Nexit then  /runs for cover :D

 

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1 hour ago, alt-92 said:

 

 

3 weeks hold for any VAT/Duty payment due?

Lucky you. One week over here.

And no freebies below 135 quid either.

 

Maybe we should go for a Nexit then  /runs for cover :D

 

If you had you might have been vaccinated by now!

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18 minutes ago, iainpeden said:

If you had you might have been vaccinated by now!

Too young, mate :D 

I'm in the back of the line  - lowest risk age group, and a surname at the end of the alphabet to boot.

 

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One question, if I may;  I've never used eBay and wondered, if someone offers a price (bid? or buy now?) at a price listed do they then add VAT to that?  I'm asking just in case I did use a service like that and offered my budget limit, whether that budget would get busted.  Likewise if I ordered from international, such as Japan etc.

Mike

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When l have ordered from Japan, not via ebay, the price you see is the price you pay. The exchange rate is pretty good at the moment as well.

 

Regards

Robert

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On 12/13/2020 at 1:54 PM, Jon Bryon said:

What happens to international sellers who sell though Ebay? Will Ebay do the VAT bit on their behalf? It seems in Ebay's interest to make this work (and to some extent Amazon's) given how much of their UK selling business comes from companies outside the UK.

 

I am fed up about this. A large fraction of what I buy simply can't be sourced in the EU, let alone the UK. Just this week I spent £20 on some Model Monkey 1/48 Panther tip tanks because they only sell in the USA. I don't mind paying a bit more but I will be annoyed if I can't buy it at all.

 

Jon

Imports from the USA should not be affected, if the company sending it to you does it legally, you will get a customs charge, at least that's how it worked in my 10yrs at Royal Mail

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30 minutes ago, Test Valley Models said:

Imports from the USA should not be affected, if the company sending it to you does it legally, you will get a customs charge, at least that's how it worked in my 10yrs at Royal Mail

Yes but now if the cost is less than £135 the seller in the US should charge you UK Vat and remit this to HMRC, this is why People are refusing to ship orders from overseas for less than £135.

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Hannant's are slowly tumbling down the list of suppliers for my modelling needs. 
Weirdly enough, other UK sellers are able to get shipments across via RM without problems - declaration forms on the packages (only one with an import duty fee - and that one I can provably contest with the customs website table of allowed goods). And all delivered in a week's time.

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On 14/03/2021 at 21:32, alt-92 said:

Hannant's are slowly tumbling down the list of suppliers for my modelling needs. 
Weirdly enough, other UK sellers are able to get shipments across via RM without problems - declaration forms on the packages (only one with an import duty fee - and that one I can provably contest with the customs website table of allowed goods). And all delivered in a week's time.

 

I can't understand why they're still making a fuss.  I've been sending parcels all over the world and other than a brief period of maybe two weeks where Royal Mail suspended services to Europe, it's been business as usual.  

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Getting parcels into the UK is not "business as usual" for overseas vendors.

 

As has been said throughout this thread, previously, VAT was collected from the customer in the UK by UK officials, typically with the buyer having to pay VAT and a Royal Mail handling fee to Royal Mail in order to release the package from Customs.  That was "business as usual".  The new WTO rules push the VAT tax collection and reporting burden to the online retailer in the U.S. who is exporting the product to the UK.  That is a new, big and costly burden for the non-UK vendor.  Allow me to explain.

 

Under the new rules, we, as a US vendor, are required to register for a VAT number and EORI code (Economic Operator Registration and Identification) from HM Revenue and Customs (HMRC) in order to deliver e-commerce orders into the UK.   Sounds rather simple, but actually, it's a mess.

 

EORI number application requires our UK VAT number, our UK national insurance number, our UK taxpayer reference and UK Government Gateway ID code.  So we need a VAT number to apply for an EORI code but we need an EORI code to apply for a VAT number. Catch-22.

 

We'll need the EORI code when we supply information to customs authorities, for example when completing customs declarations. We have been informed that an EORI number application requires:
- our UK VAT number
- our UK national insurance number (which we don't have because we don't have UK insurance)
- our UK taxpayer reference (which we don't have because we are not a UK taxpayer)
- UK Government Gateway ID code.

 

See some big problems here?

After receiving a VAT number and EORI code from HMRC, we will be required to collect all VAT fees from our UK buyers at checkout, presently set at 20% of the sales cost including the shipping cost (20% for HS Code 950320 "scale models"), then forward those taxes to HMRC quarterly.   We would also be required to pay any transaction fees and currency conversion fees associated with the electronic transfer of collected VAT to the UK government.  These are new business costs.

Additionally, the new rules require us to make our company's financial records available to UK government inspection upon demand, in an accounting format consistent with UK accounting practices.  Our business records are in a US accounting format to satisfy US taxation authorities' requirements.  We are unfamiliar with UK accounting practices and terminology and it is unlikely that our records are consistent with UK accounting norms.  We would have to quickly become familiar with UK accounting norms then evaluate our records to see if they will meet UK requirements.  If our records are found not to be consistent, we would have to create and maintain two sets of records, one acceptable to our own US taxation authorities meeting their standards, and another set of records in a format that will satisfy HMRC requirements.  HMRC recommends that we hire a UK-based tax attorney or representative to handle this for us.  I'm sure UK attorneys are not free or inexpensive.  This is a big, new administrative and financial burden, not at all "business as usual".

Unfortunately, as a small vendor, we are not staffed or resourced to comply with these new administrative requirements and financial burdens.

Because of the Catch-22 VAT and EORI requirements, we are not approved to collect VAT by HMRC because we can't satisfy the VAT/EORI application and collection requirements.  Furthermore, although we can certainly send a package to customers in the UK as though we were conducting "business as usual", we don't know if Border Force will permit the package to enter the UK or what Border Force might do with it once it arrives.  Depending on which HMRC official we ask, the package could be returned to us at our expense plus a fine levied against us for unlawful import activities, or the customer's models could be seized then destroyed by Border Force.  Presently, customers are reporting that HMRC is not yet enforcing the new requirements and their packages are being delivered by Royal Mail as they had been in the past.  We've been told that when HMRC/Border Force begins enforcing the requirements (without notice), the packages will not be delivered to UK customers since we, the US vendor, do not meet HMRC's collection and reporting requirements.  The package will either be returned to us with fine or destroyed.

 

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Suppliers that have a small company can consider selling via e-bay as e-bay does the tax part and in my case selling to the UK went surprisingly well and the item I sold was in a week in the UK...

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I have ordered one package from Europe since the lock-in, arranged a £160 delivery from Italy which must have been assessed for tax at a UPS centre somewhere in Italy, they sent me a bill as it made its way across, I paid online and it was delivered as normal.

 

If they could do that for all packages it would be great. I'm not sure what is happening to deliveries under this value. Are the couriers just rejecting them?

 

As the supplier is exempt from Italian VAT I had no price reduction, but had to pay an extra £40, so I guess this is just an extra tax we will have to live with.

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