Vat on imported models: Cross post from French railways.

[Bernard Lamb]

On 29/07/2022 at 12:13, ianp said:

All these answers above miss the point. The retailer's Ebay advert said, explicitly, that VAT was included in the price. But it wasn't. So I was misled. The advert said this, in plain English, while addressing itself explicitly to UK buyers.  If it had said "you will pay the UK's VAT at the sorting office" or similar I would have heeded that. But the advert didn't say that. It said VAT was included in the price. Shall I say that again? Included. Silly me for believing what the advert actually said. 

 

I think they make the point very clearly.

If I were you I would forget about any ambitions you might have had in respect of winning The Nobel Peace Prize.

Bernard

 

[Andy Hayter]

1 hour ago, Michael Hodgson said:

The French don't charge VAT.

They have TVA.

 

They do is the seller has translated into English and since the rest of the listing was in English ............  Well draw your own conclusion.

[Not Jeremy]

See

 

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3098

 

Nothing whatever to do with Brexit, applies to every country, not just us.

 

Went completely unreported by our National Broadcaster, hence all the ignorance and confusion on this thread.

 

Personally, I am suspicious it wasn't reported precisely because it actually does not play in to the "Brexit is bad" mantra to which we have all apparently fallen prey.

 

Another reason to scrap the license fee, oops sorry, wrong rant, over yo you guys to carry on....

 

Simon 

[Nick C]

49 minutes ago, Not Jeremy said:

See

 

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3098

 

Nothing whatever to do with Brexit, applies to every country, not just us.

 

Went completely unreported by our National Broadcaster, hence all the ignorance and confusion on this thread.

 

Personally, I am suspicious it wasn't reported precisely because it actually does not play in to the "Brexit is bad" mantra to which we have all apparently fallen prey.

 

Another reason to scrap the license fee, oops sorry, wrong rant, over yo you guys to carry on....

 

Simon 

That's about stuff going into the EU, not stuff coming from it. Rules for VAT for stuff coming into the UK are entirely down to our own government...

[andyman7]

On 29/07/2022 at 12:13, ianp said:

All these answers above miss the point. The retailer's Ebay advert said, explicitly, that VAT was included in the price. But it wasn't. So I was misled. The advert said this, in plain English, while addressing itself explicitly to UK buyers.  If it had said "you will pay the UK's VAT at the sorting office" or similar I would have heeded that. But the advert didn't say that. It said VAT was included in the price. Shall I say that again? Included. Silly me for believing what the advert actually said. 

 

 

On 29/07/2022 at 16:46, ianp said:

I refer the learned gentleman to my earlier reply, where he will see the relevant concept at the core of the matter: "misleading advertisement".

Misleading, but the knowledge in this thread should help in being able to spot where a seller is saying something that cannot be true. If the seller had shown a picture of a green engine and said that it is red, anyone would realise that there was a mistake. In this case, you took the seller's statement at face value because you were unaware that what the seller was claiming for that item was not possible post-Brexit .

[Not Jeremy]

1 hour ago, Nick C said:

That's about stuff going into the EU, not stuff coming from it. Rules for VAT for stuff coming into the UK are entirely down to our own government...

Someone will correct me if I'm wrong, but I believe our Government signed up to the scheme whilst we were still in the EU, so to that extent your statement is not correct.

 

I believe that the motivation for all of these changes was to try and protect European markets and producers from cheap Chinese imports.

 

All absolutely nothing to do with  Brexit.

 

 

[Andy Hayter]

2 minutes ago, Not Jeremy said:

Someone will correct me if I'm wrong, but I believe our Government signed up to the scheme whilst we were still in the EU, so to that extent your statement is not correct.

 

I believe that the motivation for all of these changes was to try and protect European markets and producers from cheap Chinese imports.

 

All absolutely nothing to do with  Brexit.

 

 

 

The government signed up for all sorts of things while still in the EU - like freedom of movement.  That has gone along with all of the other things relating to UK/EU relationships. 

 

You seem to be trying to score some political point which is poorly made and contrary to site rules.

 

The current rules have everything to do with Brexit  - both ways EU -> GB and GB -> EU.

 

The link you posted to is actually much more aimed at movement of goods within the EU than goods into or out of the EU.  EU sellers are now required to collect VAT on sales to other EU countries on behalf of that country and that is the prime thrust of the new legislation although there have been some changes to import/export rules as well.

[Philou]

46 minutes ago, Andy Hayter said:

aimed at movement of goods within the EU

 If you (no, not you @Andy Hayter, you've been there) go to the other thread, it can be seen that the VAT/TVA/whatever rules came into being about 6 months after B-day. For us ex-pat modellers, it has been a bit of minefield, but no doubt similar to the experience of fellow modellers in the Antipodes.

 

My brother won't send to Euro-land as it is just not worth the extra hassle. He'll send to me, but I'm prepared to take the risk as I've been very lucky that I've only had one claim for TVA on about 10 deliveries or so - that one parcel hadn't been sent RM/La Poste. Maybe the French shop won't now bother with the UK - which will make the hobby just that little bit poorer, which is a shame.

 

Hopefully my next big order from Accurascale will come direct from Eire and should avoid VAT/TVA/whatever.

 

Cheers,

 

Philip

[D9020 Nimbus]

1 hour ago, Andy Hayter said:

EU sellers are now required to collect VAT on sales to other EU countries on behalf of that country and that is the prime thrust of the new legislation although there have been some changes to import/export rules as well.

I note that a lot of German eBay sellers are now quoting prices VAT-free, saying something along the lines that the courier firm will collect the appropriate amount, as a result of "differential VAT rates". So in-EU online sales look like becoming as complex as EU-GB sales.

 

Also remember that some eBay entries are automatically translated.

[Nick C]

Just be glad we're not in the US where sales taxes can be different in each city or county, let alone state!

[McC]

1 hour ago, D9020 Nimbus said:

I note that a lot of German eBay sellers are now quoting prices VAT-free, saying something along the lines that the courier firm will collect the appropriate amount, as a result of "differential VAT rates". So in-EU online sales look like becoming as complex as EU-GB sales.

 

Also remember that some eBay entries are automatically translated.

Legally all intra  Eu sales now must show vat inclusive prices at the prevailing local rate and collect payment, then the retailer must file returns by country and vat rate. 
 

The only exception is for sub 10k revenue in that country which may be possible for very small retailers. 
 

Brexit has forced us for example to split entities, companies and physical warehouses to continue  making life simple for our customers. 
 

 

Edited July 31, 2022 by McC

[Andy Hayter]

6 hours ago, D9020 Nimbus said:

I note that a lot of German eBay sellers are now quoting prices VAT-free, saying something along the lines that the courier firm will collect the appropriate amount, as a result of "differential VAT rates". So in-EU online sales look like becoming as complex as EU-GB sales.

 

Also remember that some eBay entries are automatically translated.

 

Is that sales to the UK only or perhaps better said, sales outside of the EU?

I am not finding that for sales from Germany to France.

[spsmiler]

For several years I have been buying 3D printed items from Shapeways whose production plant is somewhere in Europe (Holland I think).

 

At first they charged VAT, but then I made several higher value purchases which to my surprise and bafflement did not attract VAT. At least one of these arrived as usual but then there was the time when the delivery driver asked for £79 VAT / import duty / handling fees. Not expecting to have to pay (and therefore suspecting fraud) I rejected the parcel and chased the carrier and Shapeways to find out what was going on.

 

I think the carrier was UPS.

 

It was only then that I was told the nature of the fee and I paid it immediately, with the delivery company promising to deliver it a few days later.

 

But that did not happen - because the box could not be found. Although no-one told me any more I suspect that either the box was destroyed or it was stolen. Shapeways had to make new 3D items for me and eventually my goods arrived.

 

I think that this purchase was made after VAT import rules had changed / the end of a transition grace period.

 

I am planning more orders with Shapeways and am wondering whether it would be cheaper to make several low value orders or one higher value order where I pay just one carriage charge but also import duty and handling fees. Their delivery charges are quite steep, especially for lowish value orders.

 

The range of model trains that can be bought there is phenomenal, although the shop owner who has the very large range of trains typically only sells the bodyshells - the chassis, motors, interiors etc must be bought elsewhere. So if buying his trains its hard work to get everything one needs.

 

Another issue is that the default 3D substance is very grainy and this is inappropriate for models depicting metal sided trains. I have to use a filler primer paint and sand like crazy to get a finish which is even 'Ok-ish'.

 

Simon

[Andy Hayter]

Hard to answer the question Simon.

 

VAT is VAT and will be charged at 20% of the delivered cost.  Then a handling charge is added.  This may be static or may depend on the value of the goods.  I have no idea which applies.

So the basis of benefit or loss depends primarily on the delivery charge.

 

You need to experiment to see how the delivery charge changes if you order say one body or say three or five.

[spsmiler]

On 31/07/2022 at 23:36, Andy Hayter said:

Hard to answer the question Simon.

 

VAT is VAT and will be charged at 20% of the delivered cost.  Then a handling charge is added.  This may be static or may depend on the value of the goods.  I have no idea which applies.

So the basis of benefit or loss depends primarily on the delivery charge.

 

You need to experiment to see how the delivery charge changes if you order say one body or say three or five.

 

Someone who has a shop selling model trains (and more) at Shapeways has suggested that it is possible to place several orders with Shapeways which are below the £135 limit above which the delivery company that imports the goods collects the VAT and have them sent as one consignment.

 

This way Shapeways are able to collect the VAT but there is only one delivery charge and the purchaser avoids the handling fees imposed by the delivery company for collecting the tax. 

 

I plan to try this out ... will say more after the event

Edited December 13, 2022 by spsmiler

[Gridiron]

On 13/12/2022 at 18:25, spsmiler said:

 

Someone who has a shop selling model trains (and more) at Shapeways has suggested that it is possible to place several orders with Shapeways which are below the £135 limit above which the delivery company that imports the goods collects the VAT and have them sent as one consignment.

 

This way Shapeways are able to collect the VAT but there is only one delivery charge and the purchaser avoids the handling fees imposed by the delivery company for collecting the tax. 

 

I plan to try this out ... will say more after the event

 

I'm fairly certain this will NOT work even if the supplier outside the UK consolidates the separate orders which individually may all be well below the limit, into a single shipment, ie one tracking reference is provided because the courier company or Royal Mail will be obliged to treat the shipment as single consignment. This is because the tracking record will become the unique reference that is given to identify the shipment to HMRC at the time of customs clearance in the UK. It would not normally be possible for the courier company to break down the unique reference into separate items even if each order was invoiced separately as they form a single consignment and the rules state. 

 

"It is important to bear in mind that the £135 threshold applies to the value of the consignment, not to each individual item within the consignment."

 

See  https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

 

Whilst technically there could a workaround for this, the courier company or Royal Mail would then probably charge a separate handling fee for additional clearance that could easily cost more than the shipping charge, and it would also probably delay what is normally at automatic process, let alone draw attention to the shipment by HMRC/UK Border Force. 

 

On the wider question of the liability of VAT and handling/customs clearance charges, it all depends on where the goods are at the time of purchase.  In simple terms if the goods are purchased from an entity outside the UK and supplied from outside the UK, the goods are subject to full UK Customs Duty and VAT plus a clearance charge. Duty is not charged on model railway products because the harmonised code used to classify the goods carries a zero rate of duty, the codes and rates of duty can be found here .

https://www.gov.uk/trade-tariff

 

Duty is based on the value of the goods, plus shipping charges, whilst VAT is charged on the total value of the goods, shipping charges and duty.  

 

If the goods are supplied by an Online Marketplace (OMP)  such as Ebay or Amazon and the goods are physically in the UK they are liable for the accounting of the VAT on import as well as the collection of the VAT from buyer, ie the VAT is payable at the point of sale.

 

However, if the goods are supplied by an independent seller on an Online Marketplace from outside the UK then the buyer is responsible for any UK duty/VAT and clearance costs. EU suppliers should normally zero rate their VAT (or equivalent) on their sale price. 

 

See  https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk

 

It should also be noted that an overseas entity can also be registered for UK VAT and hold stock in a fulfilment warehouse  in the UK in which case the VAT should be collected by the seller at the point of sale. The fulfilment warehouse is required by law to verify the seller is accounting for the correct amount of UK customs duty and VAT is accounted for under the Fulfilment House Due Diligence Scheme. 

 

Buyers should therefore check who they purchasing goods from and where the goods will be supplied from to avoid any nasty shocks. There may be different arrangements for buyers in North Ireland, IOM and the Channel Islands.   

 

 

Edited December 18, 2022 by Gridiron

[Enterprisingwestern]

 

What is the legality, moral, commercial or otherwise, of a UK company which won't remove VAT before onward transmission the the EU?

 

Mike.

[Gridiron]

12 minutes ago, Enterprisingwestern said:

 

What is the legality, moral, commercial or otherwise, of a UK company which won't remove VAT before onward transmission the the EU?

 

Mike.

Technically it could be a breach of the UK and EU VAT rules, assuming the seller is UK or EU VAT registered, but it also depends on where the goods are located at the point of sale as the rules are more or less aligned. In both cases, if the goods are supplied in one state and exported out of the UK or outside the EU the transaction is regarded as an export and the VAT should be zero rated.

 

https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703 

 

If the UK seller is NOT registered for UK Vat they should not be charging VAT in the first place, so buyers should check the supplier is VAT Registered if they are outside the UK. The supplier is required by law to show a VAT registration number on their invoice, and most should display on their website. The validity of UK VAT numbers  can be checked here https://www.gov.uk/check-uk-vat-number  whilst EU sellers can be checked on https://ec.europa.eu/taxation_customs/vies/#/vat-validation

[Crosland]

6 hours ago, Gridiron said:

However, if the goods are supplied by an independent seller on an Online Marketplace from outside the UK then the buyer is responsible for any UK duty/VAT and clearance costs. EU suppliers should normally zero rate their VAT (or equivalent) on their sale price. 

 

Or they join one of the schemes to collect the VAT so the goods can be delivered directly to the buyer. Just as UK sellers exporting to the EU can collect the appropriate VAT.

 

6 hours ago, Enterprisingwestern said:

What is the legality, moral, commercial or otherwise, of a UK company which won't remove VAT before onward transmission the the EU?

 

See above, they may be part of a scheme that allows them to collect the VAT. The buyer then has no further liability. I have heard tales that it doesn't always work and items that have had the VAT and duty paid still get assessed for them on import.

 

Alternatively they can, perfectly legally, charge whatever they want, so long as they don't claim that it's VAT. Many exporters have, for years, charged a "VAT inclusive" price for exports and used the "VAT" to offset the extra shipping costs. E.g. Sold in the UK at £24 inc. VAT with free postage. Export price still £24 but the £4 is for the extra postage cost.

[Gridiron]

On 18/12/2022 at 20:32, Crosland said:

 

Or they join one of the schemes to collect the VAT so the goods can be delivered directly to the buyer. Just as UK sellers exporting to the EU can collect the appropriate VAT.

 

 

See above, they may be part of a scheme that allows them to collect the VAT. The buyer then has no further liability. I have heard tales that it doesn't always work and items that have had the VAT and duty paid still get assessed for them on import.

 

Alternatively they can, perfectly legally, charge whatever they want, so long as they don't claim that it's VAT. Many exporters have, for years, charged a "VAT inclusive" price for exports and used the "VAT" to offset the extra shipping costs. E.g. Sold in the UK at £24 inc. VAT with free postage. Export price still £24 but the £4 is for the extra postage cost.

Since Brexit the EU has regarded the UK as a third country like the USA and China as far as customs matters are concerned, in the same way the UK has done to the EU, and by and large we incorporated the EU customs rules, known as the Union Customs code into UK domestic law with one or two tweaks along the way. One of the fundamental cornerstones of this legislation either side of the Channel is the issue of Direct Representation which relates to relationship of the Importer of Record and any third parties who represent them declaring the goods for customs purposes. For mail and courier movements there are simplifications to the rules, especially if the goods are consigned to private individuals as in these cases the provider will usually arrange the clearance electronically in accordance with the legislation on behalf the private individual named as the consignee who becomes the importer of record collecting any duty, VAt and clearance charges prior to delivery on a commercial basis.  UPS for example mails a copy of the declaration to the consignee on the reverse of their invoice.

 

However when the shipment is not a personal importer the rules are more stringent as the Importer of record also assumes responsibility for safety of the goods and all the stuff that trading standards get involved in as well the payment of any customs duty, VAT and corporate taxes. As many traders either side of Channel have found since Brexit this fast becomes a complicated affair, especially for any none resident EU  companies in particular who wish to trade with all 27 members of EU. One way to reduce this burden is to establish a legal entity in one EU member state and then use a fiscal representative to pay and  administer the VAT in each EU state, either by having a separate VAT registration themselves in each state, or through a method of reclaiming the VAT through an EU scheme. The none EU resident seller then effectively sells the goods to their own EU legal entity and then simultaneously raises an invoice to the final consignee from the EU entity sending a copy to fiscal representative. For large organisations like Ebay and Amazon this of course all possible because these organisations will have legal entities in each state and can automatically switch the billing between different states as well as account for the duty/Vat on every transaction. For smaller organisations, working through a fiscal representative, they will need to secure an agreement with either the fiscal representative or the customs broker to legally represent them under indirect representation rules which many customs brokers are becoming unwilling to do because of the liabilities incurred compared the risk and liabilities involved. In the UK we have taken the question of direction representation to a higher level, requiring  the importer of record to be registered at Companies House, have a physical presence in the UK (ie an owned or rented/leased building), evidence that business is maintained at the site, and offers local employment as well as having directors resident in the UK.  It is therefore perhaps not unsurprising that these all in pricing schemes seem relatively expensive, but provided they are set up correctly are perfectly legal, but if not set up correctly can result in the buyer being responsible for the duty and VAT (or equivalent).

 

As to the issue of VAT inclusive exports, this of course is not legal as all exports should be zero rated if the goods are exported outside the UK. I suspect because of the high costs of mail and couriers this option especially in recent years have reduced especially on smaller orders. I regularly import from a company in Germany that zero rates the VAT, and for orders over EUR300 ships by UPS/DHL and throws in a free gift to boot. I pay the VAT and a customs clearance fee of GBP11.50 to UPS and usually receive an order within 72 hours of placing the order (Monday to Friday).

 

 

 

 

 

[Crosland]

11 hours ago, Gridiron said:

As to the issue of VAT inclusive exports, this of course is not legal as all exports should be zero rated if the goods are exported outside the UK.

 

There a number of schemes such as Taxamo that enable shipping DDP (Delivery and Duty Paid) where the VAT for the destination country is paid by the sender and charged to the buyer at checkout.

[Gridiron]

11 hours ago, Crosland said:

 

There a number of schemes such as Taxamo that enable shipping DDP (Delivery and Duty Paid) where the VAT for the destination country is paid by the sender and charged to the buyer at checkout.

I don't doubt this, I was merely attempting to explain the legal basis on which they operate. At the end of the day any organisation offering these DDP terms on behalf of a third party based outside their own jurisdiction is potentially taking on the risk of representing the foreign based entity for up to seven years and could therefore be liable to substantial fines and/or legal action possibly well after the trader has ceased to trade with perhaps little legal protection. I hope this explains why they are perceived to be expensive. 

[spsmiler]

Some months later, I decided try the concept of a second purchase sent with the previous purchase

 

Both purchases were well below the VAT limit and had VAT paid at the time of purchase. But their combined value is over £200.00

 

My package is on its way to me as I type this and as I have a tracking number I contacted UPS to ask about the tax situation

 

The reply is that I am being charged £44, I assume for import duty and UPS fee. OK, I saved a carriage fee but still I say 'ouch'!

 

What hurts the most is the import duty, as otherwise I'd order enough in one go to benefit from only paying one carriage fee and one UPS fee.

 

 

Edited February 14, 2023 by spsmiler

[Andy Hayter]

Not sure what you mean by being below the VAT limit.  There is no lower limit on VAT - at least in the EU and I suspect also in the UK.

 

The only differences occur when the value of goods goes over a certain level (135€?) where the responsibilities for collection and payment can change.  Practically this may may no difference since the carrier is often charged to collect no matter where the responsibilities lie.    So whether UPS are collecting on behalf of the seller or on behalf of you the customer looks identical.  

[Nick C]

16 hours ago, spsmiler said:

Some months later, I decided try the concept of a second purchase sent with the previous purchase

 

Both purchases were well below the VAT limit and had VAT paid at the time of purchase. But their combined value is over £200.00

 

My package is on its way to me as I type this and as I have a tracking number I contacted UPS to ask about the tax situation

 

The reply is that I am being charged £44, I assume for import duty and UPS fee. OK, I saved a carriage fee but still I say 'ouch'!

 

What hurts the most is the import duty, as otherwise I'd order enough in one go to benefit from only paying one carriage fee and one UPS fee.

 

 

If you're buying model trains (or parts therefor), there won't be any import duty - they're counted as toys which are zero-rated. The charge will be 20% UK VAT plus their admin fee - I suspect when you say "VAT paid at time of purchase" it may well have been Dutch VAT (assuming this is still coming rom Shapeways)