Import Duty etc On Goods From UK After 1 January 2021

[Paul J]

It looks like the story about HMRC forcing international sellers to register for UK VAT is true for transactions below £135.

Can't see many sellers doing that and continuing to sell small quantities to the UK...or that policy lasting long politically. But who knows?

This one really puzzles me. How on earth can HMRC enforce that?

E.g.  Fred's Trains in the US have a website and a UK resident decides to buy something from them. Fred duly sends the goods with a properly filled out customs form from the US Post Office.

What happens when the goods arrive in the UK? Does RM return the item as no VAT has been paid, do they contact the seller for the VAT, or do they contact the buyer?
Has anyone actually broken any law?

Regards,

John P

Good question! Beats me!

[woodbury22uk]

If a package arrives without VAT pre-paid then Royal Mail go back to using the old BOTTOM system (Back On To The Old Method). They send the receiver an invoice for the VAT plus their fee, and deliver after the invoice has been paid.

If the VAT is pre-paid, then they just deliver the package as no charges are due.

[njee20]

So as said, it's hard to imagine anyone doing that! So buying from anywhere just got markedly harder, not just the EU. Happy days.

[jpendle]

So buying from anywhere just got markedly harder, not just the EU. Happy days.

No, buying from the US and other non-EU countries has always been that way.

Regards,

John P

[njee20]

Not with HMRC suggesting foreign retailers may like to collect VAT as per your example...? Note I didn't say more expensive (as the buyer always paid the VAT), but it sounds like they've put a load of new systems and process in, which no one will use, so we'll just default to what happened before.

[longbow]

I assume that HMRC is looking at a similar system to that introduced by Australia a few years ago, whereby the largest foreign online retailers were persuaded to collect GST (ie VAT) on their Australian sales. The motivation for all parties is the exemption of deliveries from the slow, tiresome and costly process of collecting tax at the border.

Foreign retailers with Oz sales below a threshold (and that includes the likes of Rails and Hattons) are not obliged to charge GST and it's not levied at the border either on parcels worth less than A$1000/GB570, so UK modellers here are doubly blessed.

[njee20]

It sounds like it, be interesting to see if anyone does. Given European retailers don't generally even deduct VAT for non-EU purchasers I don't hold out much hope. Postage from the US is usually laughably expensive, so adding 20% for the VAT at source is unlikely to help.

Basically it's really rubbish!

[Alcazar]

There seems to be some confusion about VAT here. You have to be registered as a business before you can charge VAT, and normally there is a limit on turnover, below which you can opt out of charging it. Since I retired I have been working freelance, and because most of my contracts were in Switzerland, I opted out. In any case, no VAT is charged on services that are provided across borders.

For retailers, however, VAT can be charged and reclaimed at the border of the country where the goods were sold, provided you have the appropriate customs forms. I see this everyday when Swiss queue at the custom's post just down the road to reclaim their 19% VAT on their purchases. Normally, they would then have to pay the Swiss rate at the other side of the border, but they have a tax-free limit of CHF 300 (I think), so most don't pay anything. The Swiss customs do occasionally have checks at the border or further down the road to find malingers.

In the other direction, no one bothers, as Swiss VAT is less than German VAT. Living on the border we have a tax free limit of €80, but it is more if you live further inland.

It follows then, that anything entering the UK will be subject to to UK VAT. If your European retailer does not take off the VAT at source you are left with the problem of paying it twice, although the tax-free limit of £135 will apply. We'll have to see whether the green custom's declaration takes VAT into consideration. You can be sure that the carrier will charge for collecting VAT in the UK, so there will be additional costs. That is one of the consequences of leaving the free market.

Private sales are not subject to VAT, so when e-bay quotes 20%, it can only be on it's services. However, how are the customs going to be able to differentiate between a private and commercial sale?

Peter

[njee20]

I've looked this morning at 3 German bike shops I've used before. All three have totally stopped selling to the UK (which would have been a big market in each case - one even had a .co.uk domain), they just have this message:

[woodbury22uk]

The Ebay VAT collection policy is here and appears to apply to all purchases up the GBP135. That should trim back sales.

https://sellercentre.ebay.co.uk/global-sales/2021-vat-changes

[Alcazar]

I've looked this morning at 3 German bike shops I've used before. All three have totally stopped selling to the UK (which would have been a big market in each case - one even had a .co.uk domain)

I'd check again in mid-January - hardly anyone works over the Christmas and New Year break in Germany, and this year most will start again on January 11th. As the agreement didn't arrive until Christmas Eve, I imagine they just played it safe until they knew what was happening.

Peter

[Alcazar]

Maybe this explains everything (from the Mirror):
https://www.msn.com/en-gb/money/other/eu-firms-suspend-deliveries-to-the-uk-over-ludicrous-new-brexit-tax-rules/ar-BB1csF0t?ocid=msedgntp

Peter

[jpendle]

Maybe this explains everything (from the Mirror):
https://www.msn.com/en-gb/money/other/eu-firms-suspend-deliveries-to-the-uk-over-ludicrous-new-brexit-tax-rules/ar-BB1csF0t?ocid=msedgntp

Peter

Exactly the same story on the BBC website.

There's a quote from HMRC that says this is to stop UK retailers being put at a competitive disadvantage from VAT free sales, but that's tosh. AFAIK UK buyers have always had to pay VAT to Royal Mail, plus a handling fee.

Regards,

John P

[njee20]

Brooks, a British saddle manufacturer who make their saddles entirely in the UK cannot currently sell to UK clients because they forward their products to Italy for  onward distribution (including to the UK). Breathtakingly stupid.

[woodbury22uk]

Maybe this explains everything (from the Mirror):
https://www.msn.com/en-gb/money/other/eu-firms-suspend-deliveries-to-the-uk-over-ludicrous-new-brexit-tax-rules/ar-BB1csF0t?ocid=msedgntp

Peter

The UK is the dry run for the same setup being introduced within and across the EU from July onwards.

https://www.pwc.ch/en/insights/tax/new-ecommerce-eu-vat-rules-july-2021.html

We'll see.