Purchasing from Europe - the VAT / Del Charge situation

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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby scouserjoe2 » Fri Jan 15, 2021 12:54 pm

Hi,

There is one other point to remember here. There are companies who are based abroad but who trade in the UK (and this is particularly appropriate for example to downloaded products) DO have to register separately for VAT in the UK and WILL legitimately charge UK VAT at 20%. Not all foreign based companies are required to register for VAT, only when the turnover of business in the UK exceeds certain limits. I do not know if this applies to Thomman, I shall have to investigate. When I was carrying out VAT checks before the single market was introduced in 1993, VAT on such imports like this from retailers would be 'clocked' at importation and VAT charged then. Different agents work differently when importing goods; The Post Office ask you for payment before delivery, however firms like Fedex send you a bill afterwards.

Cheers,

Ian
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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby scouserjoe2 » Fri Jan 15, 2021 7:20 pm

Hi,

Further to my last post, I have since spoken to a friend of mine with whom I worked in the Customs and Excise, or should I call it now Revenue and Customs. He has confirmed much of what I thought.

From 1st January 2021 the UK becomes a 'Third Country' as far as the EU is concerned. Effectively, this means that the way import transactions are treated will return to the way they did before the introduction of the single market in 1993. Importing from countries like France and Germany will now (almost) be the same as importing from the USA or Australia, for example buying Kinman pickups directly from the Philippines or a part directly from Fender USA. I say almost because importations from the EU will not be subject to duty, tariffs or quotas that are imposed on other 'Third Country' goods - that is part of the trade deal that the UK has agreed with the EU. However importations of a value which exceeds £135 will be subject to 20% VAT plus any fees incurred and passed on by the import agents who pay it on your behalf. Therefore if you make a purchase from a supplier in the EU you should NOT be charged VAT in the country of exportation, but you will be charged VAT at 20% when the goods pass through Customs here. Items valued less than £135 are however treated differently and VAT will be charged at the point of sale unless business to business exemptions apply.

However, there are exceptions .. important ones too. As I said in my previous post, large companies who do more than £85,000 worth of business annually in the UK are required to register in the UK for UK VAT. This would mean that, if a firm like Thomman do that amount of business in the UK then they should be registering for VAT in the UK and charging UK VAT. If they do this through their offices in Germany then the consignment being sent to the UK should be accompanied with the correct documentation showing that this is the case and it will pass straight through Customs without further charge. I have experience of this happening in the USA; I have imported cameras and other photographic goods from B&H Photo Video in New York, and they always provide me with a price that includes UK duty, VAT and shipping. The items then come to me directly without intervention by UK Customs.

The myth that leaving the EU with a trade deal would mean that nothing changes is now becoming exposed. Everything is changing and more paperwork will be required for international trade and Customs will be examining more postal importations than before - and you need to be aware what taxes you are being charged when you buy goods on line. If you are not charged VAT at the point of sale, you are likely to end up paying it when the goods enter the UK and there may be a delay in delivery if payment has to be made 'up front' to the agent. One further point to remember, that trade between the UK mainland and Northern Ireland is similarly affected. I found out when I needed to send goods to an address in Belfast for which I was required to fill in the same Customs documentation as I would for the USA, Canada or New Zealand.

Just beware .. everything has changed .. if you need to know more then https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk explains further and in more detail ... or maybe it just confuses further !!

With regard to the case in question at the beginning of this post, then any requirement to pay duty and VAT to the Post Office will be notified to you by letter, giving you a transaction number and an invitation to pay on-line. I would be most suspicious if my Postie handed me such a card, I would hand it straight back !!

Best of luck

Ian
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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby SJB » Sat Jan 16, 2021 12:00 am

Here we go again.

In my first post I tried to indicate to potential buyers from the Eu to be careful and note that the Vat is not shown - example the Thomman site.

Please take note the following statement from the Thomman site - I assume it will be the case for other suppliers for items over £135:-

Quote:-
Based on the feedback we have received so far, Government Charges will be collected by UPS and they consist of the 20% VAT plus a small amount for the paperwork involved (usually around 2.5%). There is also an additional amount to be paid to UPS for their service, which is a minimum of 11.50 GBP. As not every order has the same customs requirement, for further information we advise that you check the costs and procedures in advance with the courier locally.
Quote end:-


Note that they say their carrier "UPS" will collect the VAT and also an additional amount of around 2.5% for paperwork and also a further charge for UPS for their service.
The 2.5% is of what? - The Vat - on something costing £135.01 is £27. So the paperwork is £0.68
The 2.5% of the item is £3.38

So are we going to end up with a total for the item of £134.01 to be (assuming £11.50 for UPS service - we don't really know what this is calculated on it could be much higher - who knows?)

not bothered with including the £0.01 over:-
£135+£27+£0.68+£11.50+£8 = £182.18
or
£135+£27+£3.38+£11.50+£8 = £184.88

Equivalent price in UK would be £135+£27 = £162 with whatever the delivery is - often no cost.

Conclusion:

Anything over £135 - you don't know the carrier cost - you have to contact the carrier - messy.

Anything under £135 the VAT is added to the advertised price when you order - so you can work this out - just be aware when comparing with UK stores the price shown is less vat.

So its ok if its under £135 to shop in the EU - otherwise 8-)

Maybe the hassle will help UK stores.
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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby scouserjoe2 » Sat Jan 16, 2021 7:12 pm

Hi Stuart,

To answer your query, service charges or agents fees for carrying out the importation on your behalf can vary according to whom the agent is. Fedex, DPD, UPS, Royal Mail, Parcelforce and all the others use different systems. Some impose a percentage charge based on the cost of the item, others have a fixed fee - particularly for lower valued items. More often than not you will not be able to choose the shipper, the retailer will do that, so you're stuck with whatever charging system the shipping agent employs.

Also, it's important to note by the way that the VAT on importation is charged at 20% on the cost of the item plus the duty, plus shipping, plus insurance. Obviously there's no duty on items imported from the EU and insurance is usually included within the shipping charge. So if Thomman charge you, say, £150 for an item and £11.50 for shipping, then the VAT you will pay is £161.50 x 20% = £32.30.

As mentioned in another thread I recently purchased a set of Kinman pickups from The Philippines. There was no duty and the VAT was £40.33. The shipper/agent, who was Fedex, charged a flat fee of £12. So that £52.33 was a cost additional to those of the pickups themselves. The package came straight through Customs in double quick time; the bill for the VAT and agent's fee came some 4 weeks later by post and was paid on-line.

As I said in my previous post, the implications for purchasing abroad from the EU have changed significantly and now mirror what happens in the rest of the world. It's been 27 years since the creation of the single market and we had all become accustomed to operating within it. Things will be very different from now on !!

Best

Ian
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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby Gatwick1946 » Sun Jan 17, 2021 7:39 am

Hi Ian,

Nice to hear from a fellow former member of that once great, dept. of government, HM C&E. In my experience, we were always the last to know about anything, and it was generally best to wait until the bumf from HQ had been tested in the real world, at the "coalface".

The shipping and forwarding agents were always very helpful, I found, and we had a good working relationship.

I remember standing on the Airside/landside boundry at LGW, when the blue channel came into use, ie we were fully in the EEC, and had to abide by their rules. It was midnight and as someone took a photo to mark the great moment, I thought "wonder how long this will last". But it is always easy to be proved correct with the benefit of hindsight!

When I became a Gentleman of the Excise, in 1974, I shared a big office with my senior officer, full of our equipment, some of which,(and the files) went back to the 19th century. When I retired from the (former) Waterguard in 2003, I had 2 drawers in an office shared with about 100 other staff. But I was noticed by the Collector London Airports, just before I retired, as I usually made an effort to wear the full traditional uniform (legend was the Royal Navy copied it in days of yore!) - compared to the youngsters, who had to wear so much kit (Stab vests, handcuffs et al ) that they looked like a police SWAT team!

Happy days and I considered it an honour to serve alongside some tough and experienced colleagues. When at school, I expressed an interest in joining HM Customs, I was told "you will never get in unless your father was in". Times changed and they let me join! - it all went downhill after that no doubt!

My best wishes go to the staff of today, trying to do a good job under the present circumstances. To my chagrin I was on a rest day when Hank Marvin came through the channels, but was lucky to speak to many stars of stage and screen, including, Cliff (very well spoken) Paul McCartney, Jack Bruce, Eric Clapton, Frank Sinatra,together with politicians (Sir John Major) and a relative of Kaiser William II, travelling on a Swiss diplomatic passport. Also many royal figures (including Sir Tony Armstrong-Jones). I was happy to send them on their way, with a salute and a polite "carry on please sir". The Spice Girls were wearing a minimal amount of clothing - but that was their image no doubt! I won't mention (darn it, I have) the star of "those" films, Miss Chesty Morgan!

Finally, when some very expensive and beautiful guitars came through as freight, I had the pleasure of giving them a close examination, to ensure they were correctly declared on the Customs entry forms.

All opinions are, of course, solely my own. With apologies for going "off topic".
With kindest regards,
Christopher
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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby SJB » Thu Jan 21, 2021 2:03 pm

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

First order from Europe DPD 32% charges inc the Vat
Second order from same supplier via UPS 41% charges inc the Vat

Just pointing it out.
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Re: Purchasing from Europe - the VAT / Del Charge situation

Postby scouserjoe2 » Sun Jan 24, 2021 7:07 pm

Hi again,

There is one very important point to mention here that the general public are probably not aware of and, it seems, overseas retailers selling into this country seem to have conveniently forgotten. Now that the transition period is over and the UK is officially outside the EU, any retailer located within the EU and selling to a country outside the EU should NOT charge the VAT rate appropriate in his own country. For goods from say, from Germany to the UK, no duty should be charged because we have a trade deal with the EU and no German VAT should be charged either. So, if before Brexit an item from Germany was sold to a customer in the UK for £100, then post Brexit the item should be sold for £100 less the 19% German VAT, so that will be £100 - £16 = £84. Because the item is technically arriving in the UK without duty and VAT, that is why VAT is charged at 20% when it arrives here. This procedure should now fall in line with goods purchased from the rest of the world. When you buy an item from the USA you are not charged any local or state taxes. The example applies if you buy Kinmans from the Philippines - you are not charged local taxes.

Reversely, all overseas visitors to the UK qualify for a VAT-free export scheme and all overseas on-line buyers should not be charged VAT on exports from the UK. HM Customs and Excise have operated a VAT Free export scheme since its inception in 1973 ( I know because I often had to check this with retailers when I visited them to check their VAT accounts !!)

Unfortunately some unscrupulous overseas companies have used this as a opportunity to increase their margins and are 'pocketing' the difference and still charging the same price, so when VAT is automatically added when the goods arrive in the UK from Germany customers are paying 20% VAT in ADDITION to the 19% VAT they have already paid in Germany.

My recommendation ... check your prices carefully. Buying overseas may no longer be as attractive as it used to be.

Cheers,

Ian
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