Draw Decals ceases UK sales - New Regulations making sales impactical

[czechnavy]

Dated 12th January:

 

Due to the recent decision in the UK to make shippers collect a 20% VAT tax for packages sent to the UK and pay it quarterly, we regret that we have no choice other than to suspend any further sales to the UK.  Current open orders will be filled and shipped, and we hope for the best for their safe delivery.  This is a very unfortunate decision by the UK, and we wish we had a way to avoid it.  We have many great customers in the UK, and we will miss you all.  If you are a citizen of the UK please plead with your lawmakers to change this unfair tax collection.

[JackG]

A resin producer (TMD) located n the States, has made the same decision.   His explanation is he is not paid by the British government to collect taxes for them.

 

regards,

Jack

[LanceB]

Silly question, but what exactly could Her Majesty's Revenue and Customs do to an overseas company that shipped to private individuals and refused to collect British VAT?  I would think they would have zero ability to penalize the makers, about all they could do is seize packages at the border, but how would they know if taxes had been collected if said monies are not due then and there, but "next quarter"?

[Adam Poultney]

Without getting into the politics as that's not what we're here to discuss, take this comment as a notification of my frustration at the practical implications on things like this.

Hopefully everything smooths out in the long run but I can see more of this type of thing incoming in the short term. 

[Branky]

What UK Goverment and Customs could do is block the parcels from a certain shipper to enter the country when duties are not paid and return then at the cost of the shipper. BTW shipping from the EU to the UK now also faces extra postage due to 'shipping across border' 

[TIGER HOBBIESLIMITED]

A lot of Mainland European Brands need to find UK distributors.  A Distributor will do all the custom clearance and pay the 20% vat on landing and then sell and distribute the product in the UK then as normal.

 

This is good opportunity for smaller business to move up the ladder,

 

The tax at vendor system will become more widespread to a point direct retail will be a pain in the rear.

[B_Bogus]

Typically when importing from outside our economic border, HMRC collect any duties (Import, VAT) prior to delivery - plus their (IIRC) £16 processing fee. 

What this new nonsense is about, I don't know!

[bentwaters81tfw]

Decals are zero rated, so there is nothing to collect.

[JohnT]

7 minutes ago, bentwaters81tfw said:

Decals are zero rated, so there is nothing to collect.

Good point but I imagine that the paper pushers will still want forms and zero declared forms anyway 

 

From what I read this was in the pipeline come what may as the EU are, I believe, doing the same thing, just on a little later timescale than us 
 

On the basis one mans problem is another’s opportunity I bet this will all pan out in a year or so.  Perhaps some UK aftermarket development takes place?   Meantime it’s a pain but there are worse things these days. 

[Branky]

Apparently Greg Drawbaugh of Draw Decals has a different opinion about that...  But true, If distributors will take all the fuss and costs of importing the stuff out of your hands and distributes them to all the dozens of Modelshops all over Britain then there will be no problem to the UK modelers except some rise in prices.

[bentwaters81tfw]

4 minutes ago, JohnT said:

Good point but I imagine that the paper pushers will still want forms and zero declared forms anyway 

 

 

He could just send an electronic return. Not as if he has to collect and send money.

[Mike]

I've amended the topic title to be less political, although I appreciate that this is a completely political issue.  If we can focus on the practicalities rather than venting your political ire on the thread, it'll remain open.

[Graham Boak]

19 minutes ago, B_Bogus said:

Typically when importing from outside our economic border, HMRC collect any duties (Import, VAT) prior to delivery - plus their (IIRC) £16 processing fee. 

What this new nonsense is about, I don't know!

Not so for private sales: the VAT and an £8 charge is collected by Royal Mail before handing the goods over.  For commercial practice, I wouldn't know.  The new system will mean that deliveries to UK individual customers will be collection charges free, just turning up at your door as any other mail.  It does mean that you won't benefit from the random totally free delivery anyway, but that will benefit UK businesses who will no longer operate at a tax disadvantage.

[Branky]

In that private sales the VAT and 8% will now be incorporated in the sellers overal price which the UK customer has to pay. So all in all a fair system to the UK businesses. But in the previous EU system the products were sold to the UK already incorporating the VAT of the shipping countries and there were no custom charges. From outside the EU items were send VAT free and with small parcels often ended up on the customers doorstep without VAT or charges being added. So no matter how you look at it, modelling will be a bit more expensive for the individual modeller but to the benefit of the UK companies who can now be more competitive

[Ghostbase]

55 minutes ago, bentwaters81tfw said:

Decals are zero rated, so there is nothing to collect.

I just took a look at my Hannants account and all the decal sets I have purchased from them show that VAT was paid 😖

 

Michael

[Ghostbase]

Ok, I have complained to my MP as follows:-

 

"Dear Angela,

I would like to bring to your attention the issue of the new VAT collection arrangements that now applies to small businesses outside the UK which directly trade their goods with individuals within the UK. As I understand it those foreign sellers are now mandated to collect 20% VAT on the goods that they sell, this on behalf of HMRC, and to submit those payments on a periodic basis (I believe this to be quarterly). I also understand that this applies to goods under a certain value, I have heard it is under £135, but I am not 100% sure about that.

This affects me because I am a keen scale modeller and typically I will purchase kits within the UK however I obtain what we call 'after market' items such as etch, decals, and resin parts from very small bespoke businesses many of which are located outside the UK and the EU. These items tend to be unique to those sellers, who are often sole traders in their own right. Many of the sellers that I purchase from in the USA have announced that they are going to cease selling their goods in the UK because they do not have the time to calculate and collect VAT and they, understandably, do not see it as their role.

I ask you to reconsider these new arrangements and make changes so that foreign sellers are still able to trade in the UK without penalty. I know that scale modelling is a small world however this will be happening in many other leisure activities as well and it is limiting the choice of goods available to many people in this country.

Yours sincerely"

 

It isn't perfect English but it will do. PLEASE contact your MP via here https://members.parliament.uk/members/Commons

 

I am sure my MP does not read Britmodeller so at least I can do this much.

 

Michael

[Tim R-T-C]

4 hours ago, Branky said:

. So no matter how you look at it, modelling will be a bit more expensive for the individual modeller but to the benefit of the UK companies who can now be more competitive

 

4 hours ago, Graham Boak said:

.  It does mean that you won't benefit from the random totally free delivery anyway, but that will benefit UK businesses who will no longer operate at a tax disadvantage.

 

4 hours ago, JohnT said:

 

On the basis one mans problem is another’s opportunity I bet this will all pan out in a year or so.  Perhaps some UK aftermarket development takes place?   Meantime it’s a pain but there are worse things these days. 

 

Do people really think that there are tonnes of UK based aftermarket developers out there just desperate to start making thousands of decal sheets, resin pieces and photoetch accessories who haven't been able to because US based firms could undercut them by a few pennies on tax?

 

4 hours ago, TIGER HOBBIESLIMITED said:

A lot of Mainland European Brands need to find UK distributors.  A Distributor will do all the custom clearance and pay the 20% vat on landing and then sell and distribute the product in the UK then as normal.

 

This is good opportunity for smaller business to move up the ladder,

 

The tax at vendor system will become more widespread to a point direct retail will be a pain in the rear.

 

A very optimistic approach, I'm sure that UK distributors are falling over themselves to offer niche European photoetch products to the UK market that they didn't consider financially viable before, especially when sales back into the EU will now attact additional taxes.

 

Not to mention that many resin and decal suppliers such as the aforementioned DrawDecal do a lot of production on demand because even they don't have enough demand to hold stock of products.

 

Fact is, until the tax issue is solved UK based modellers will simply have to do without, we can just hope the issue affects enough people to make the government notice.

Edited January 18, 2021 by Tim R-T-C

[Tim R-T-C]

1 hour ago, bentwaters81tfw said:

He could just send an electronic return. Not as if he has to collect and send money.

 

2 hours ago, bentwaters81tfw said:

Decals are zero rated, so there is nothing to collect.

 

I don't know about decals specifically but artworks attract tax on arrival to the UK. I've had to pay before when buying prints from the US.

 

Even if decals are exempt, you still need to register with the UK tax system at your time and expense to get the necessary tax codes to declare them as zero rated, to print out the forms, to attach to the packages so that the delivery firms will accept them. And this system isn't even properly working yet - hence many delivery firms refusing to accept UK bound packages.

[Branky]

That is pessimistic. Most of the goodies will still be available to the UK modellers but a tad more expensive. Also I am sure that Mr Ford of  Tiger Hobbies will be all to happy to start stocking all those zillion of modelling titbits produced outside the UK to distribute among the eager UK small businesses. Give it and him a chance!    

[ckw]

2 minutes ago, Branky said:

Most of the goodies will still be available to the UK modellers but a tad more expensive

Remains to be seen. Are sales for individuals in the UK going to be worthwhile for small operations to go through all the admin tape? Remains to be seen,

 

Of course come July, UK businesses will need to do the same thing - they will have to register for VAT in an EU country to sell items under 150 euros to EU customers. Looks like a lose-lose situation for customers and small businesses either side of the Channel (or Irish Sea). Not sure what special rules apply to Northern Ireland ... possibly some wriggle room there.

 

Cheers

 

Colin

[B_Bogus]

2 hours ago, Graham Boak said:

Not so for private sales: the VAT and an £8 charge is collected by Royal Mail before handing the goods over.  For commercial practice, I wouldn't know.  The new system will mean that deliveries to UK individual customers will be collection charges free, just turning up at your door as any other mail.  It does mean that you won't benefit from the random totally free delivery anyway, but that will benefit UK businesses who will no longer operate at a tax disadvantage.

I *was* talking about private sales - whoever takes the money from your account is irrelevant - it goes to HMRC.

 

I'm deleting as quickly as I type as I'm trying not to get all political! 

[Graham Boak]

OK, but the amount will differ because there is no collection charge if it is paid before posting.  The additional workload is shifted to the producer, just as it is now for British traders.   

[Stu_davros]

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

 

 

I don't know about decals specifically but artworks attract tax on arrival to the UK. I've had to pay before when buying prints from the US.

 

Even if decals are exempt, you still need to register with the UK tax system at your time and expense to get the necessary tax codes to declare them as zero rated, to print out the forms, to attach to the packages so that the delivery firms will accept them. And this system isn't even properly working yet - hence many delivery firms refusing to accept UK bound packages.

 

I used to think decals were exempt, but the last time I checked they attracted VAT at 20%. Check the commodity code on the Gov website below.

 

https://www.trade-tariff.service.gov.uk/headings/4908

 

As far as I can determine they changed from 0% Vat to 20% in about 2011/2012.

 

 

Stuart

Edited January 18, 2021 by Stu_davros
Additional info.

[VMA131Marine]

3 hours ago, TIGER HOBBIESLIMITED said:

A lot of Mainland European Brands need to find UK distributors.  A Distributor will do all the custom clearance and pay the 20% vat on landing and then sell and distribute the product in the UK then as normal.

 

This is good opportunity for smaller business to move up the ladder,

 

The tax at vendor system will become more widespread to a point direct retail will be a pain in the rear.

This is a wildly optimistic view. For the most part we are talking about direct sales of products produced in the low hundreds to low thousands of units, only a fraction of which would end up in the UK. On top of that the UK distributor is going to want the typical 40-50% wholesale discount and selling to the UK looks even less attractive. 
The one alternative would be to sell through a third party like eBay or Amazon that will collect the VAT for you and submit it to HMRC but there are fees for doing that which may make it uneconomic.

The bottom line is that a lot of these small companies’ items will become unavailable in the UK.

[TIGER HOBBIESLIMITED]

Sorry this is not an optimistic view, just a business view, I will agree it would not be my cup of tea as it may not be viable for a company my size,   Distribution comes in all shapes and sizes.

 

In this case all it would need is a keen retailer even a small retailer with a on line presence, to contact draw decals and for Draw Decal to come up with a trade price.

 

The retailer then buys the goods pays the Vat and shipping charges, and does the customs clearance which may cost about £35.00 a consignment.

 

Once in the UK the modelers then have a outlet (known as a single outlet distribution rather than a multi outlet distribution as in our case ( We import the products and sell them to many outlets)

 

This is not rocket science, if some one wants to contact Draw Decals Tiger Hobbies could put them in contact with some of our keen retailers who are doing this now.

 

As some one says lost opportunity for some and opportunity for others.

 

Yes it will possible be slightly more expensive per items but you will still have the opportunity to buy.

 

Pro-rata the UK is possibly the largest model market in the world, so if these specialist Euro base products want a slice of the cherry cake it means a little more effort and less thinking the worlds coming to an end.

 

I voted to remain,  any one with a hint of foresight could see this coming for many small business in the UK and Europe, but no use crying split milk time to step up to the plate.

 

 

Edited January 19, 2021 by TIGER HOBBIESLIMITED