Hattons to Charge Local Taxes on Overseas Purchases

[kevinlms]

2 hours ago, St Enodoc said:

I think you are on the mark, Peter. I seem to recall from a few years ago that only suppliers who do business with Australia above a certain value ($75,000 pa?) have to charge GST.

 

This is exactly the same as any business operating over the threshold (which I believe is still $75,000) within Australia, they MUST charge and claim GST. I don't know Hattons' figures (nor is it any of our business to know), but I think it's unlikely they wouldn't exceed that amount to Australia.

 

In fact some small businesses in Australia that are under that, do report GST, because it is easier, if they mostly deal with other businesses. Better than supplying paperwork that says you don't charge GST and having customers querying it.

[RichardT]

This doesn’t directly affect the matter at hand, but Hattons have recently expanded into the North American secondhand market in a big way and then have bought MB Klein (aka “ModelTrainStuff”) one of the big US online dealers - and one of my preferred pushers for my overseas US N purchases.

 

I suspect Hattons’ overseas trade has thus grown a lot in the past tax year. I wonder if they have had an audit or inspection relating to their increased import/export business and adherence to rules has had to be tightened…

 

Richard

 

PS As a proud Yorkist I wish to register my displeasure at the repeated use of “Richard III” as a euphemism!

Edited December 8, 2023 by RichardT
Spelling

[AY Mod]

11 minutes ago, RichardT said:

I wish to register my displeasure at the repeated use of “Richard III” as a euphemism!

 

Word is that Parking Eye are still after him for not paying and displaying.

[brossard]

I was doing business with Hatton's for decades and happy with the service.  Recently I noticed that their shipping terms meant that most parcels are being shipped by courier.  I hate couriers, they are expensive and there are fees.  My preference is for the mails.  As for GST, in all my years of receiving parcels the vast majority have been delivered to me without charges for GST.  Larger, more expensive parcels will attract the attention of the tax men, I can live with that.  Surely it should be the receiving country that is responsible for collecting tax.

 

Lately I've been using Antics for my railway stuff, they seem more reasonable.

 

John

[34theletterbetweenB&D]

2 hours ago, RichardT said:

As a proud Yorkist I wish to register my displeasure at the repeated use of “Richard III” as a euphemism!

Especially as recently analysed documentary evidence exonerates him of the Tudor smear campaign casting him as the murderer of 'the princes in The Tower'. Henry Turder perhaps?

 

And three cheers for Josephine Tey and 'The Daughter of Time.

Edited December 8, 2023 by 34theletterbetweenB&D
Wanted to add a little more

[SJR]

Hattons customers in New Zealand have received the same email so its not confined to just the ATO, the IRD are over it as well.  Mark's & Spencer were tax free to NZ until a couple of years ago too.

 

It's more expensive for Kiwis as our GST rate is 15%.

 

I've dealt with Hattons for 50 years and have always  received excellent service. Their trunk facility was great for saving postage so this is quite a shame.

 

Regards, 

Simon

 

[ikcdab]

I assume that purchasers in Australia don't pay UK vat , so in effect, get a 20% reduction on the prices showing in hattons website? If so, then a "mere" 10% increase is still a saving.  Though I admit that the shipping costs make my eyes water.   

[jpendle]

43 minutes ago, ikcdab said:

so in effect, get a 20% reduction on the prices showing in hattons website?

They get a 16.66666% reduction on prices shown on the Hattons website, or any other shops website, as do I and anyone else living outside the UK.

 

VAT is an ADDITIONAL 20% added to the price of the good, so before VAT if the price is £10 then the price with VAT is £12.

 

To get back to the price without VAT you need to divide 2 by 12 = 16.666%

 

Regards,

 

John P

 

[Jon Harbour]

4 hours ago, ikcdab said:

so in effect, get a 20% reduction on the prices showing in hattons website? If so, then a "mere" 10% increase is still a saving.  

 

Yes, That is right. Until this change takes effect, we ddon't pay the UK 20% VAT, which is one of the reasons (if not the main reason) why it is so much cheaper to purchase UK outline trains from Hattons than to buy them in Australia. Yes, with GST applied, it is still a saving compared with the UK price, but  it still 10% more than I would pay before.

 

Hattons trunk facility still trumps the negative impact of this increase though. I used to get fed up when pre-ordering a couple of wagons at another store and although they might arrive at that store together from the manufacturer, one would be processed on the Monday, get shipped out and incur a shipping cost and the second would be processed on the Tuesday, get shipped out and incur a second shipping cost even though they were ordered at the same time! 

 

Hattons trunk avoids all that hassle. I select what I want to ship and it all goes with a single shipping charge. If you are judicious in what you order, the VAT saving more than pays for the shipping!

 

10 hours ago, brossard said:

 I hate couriers, they are expensive and there are fees.  My preference is for the mails. 

 

I agree couriers like DPD, DHL and Aramex are more expensive, but there are the advantages of tracking and speed. The way I read Hattons explanations, if you keep the shipment under $1,000, then no GST is collected at point of arrival so there would be no reason for a courier to charge a fee. I usually get my stuff shipped from Hattons with DHL and have never been charged any service fees or administration fees by them. I still intend to use Hattons and DHL, but I just have to apply a bit of forethought on the size of the shipments!

[jjb1970]

In most countries, these changes haven't affected tax liability on goods, only how money is collected and requiring registration for overseas sellers to pay if their sales cross a threshold.

 

I used to buy a lot of models from overseas in the UK, not because it was cheaper but because as an enthusiast of North American outline HO brass models and Chinese & Japanese trains most of the sellers were in the US, Japan or China/HK. I always added the 20% VAT plus the post office handling charge to the price as part of deciding whether the model was worth it and assumed I would be charged. 

 

What I objected to wasn't paying the VAT, as with all taxes it's not a voluntary payment and we should budget according to those liabilities, it was the handling charge. If I remember rightly the post office and parcel force charged about £13 to check parcels and collect the VAT, and parcels could sit in their Coventry international depot for weeks until being cleared. If they're going to charge £13 to check the customs declaration and send out a letter telling you how much you need to pay (noting cost of administration and collection is already part of tax rate setting) they could at least hire enough people to do the job quickly.

 

If the new system expedites delivery and avoids handling charges I don't necessarily see the change as bad from a buyer perspective.

Edited December 9, 2023 by jjb1970

[Hilux5972]

8 hours ago, SJR said:

Hattons customers in New Zealand have received the same email

 

I haven’t received any such email. Was wondering if it will apply to us as well. 

[45568]

5 hours ago, Jon Harbour said:

 

Yes, That is right. Until this change takes effect, we ddon't pay the UK 20% VAT, which is one of the reasons (if not the main reason) why it is so much cheaper to purchase UK outline trains from Hattons than to buy them in Australia. Yes, with GST applied, it is still a saving compared with the UK price, but  it still 10% more than I would pay before.

 

Hattons trunk facility still trumps the negative impact of this increase though. I used to get fed up when pre-ordering a couple of wagons at another store and although they might arrive at that store together from the manufacturer, one would be processed on the Monday, get shipped out and incur a shipping cost and the second would be processed on the Tuesday, get shipped out and incur a second shipping cost even though they were ordered at the same time! 

 

Hattons trunk avoids all that hassle. I select what I want to ship and it all goes with a single shipping charge. If you are judicious in what you order, the VAT saving more than pays for the shipping!

 

I absolutely agree Jon, and I have reviewed my pre-orders with Hattons. Where I have relatively low-value items such as wagons and the occasional diecast vehicle, I will probably stay with Hattons as they can be released over some weeks and stay in the trunk until sufficient accumulate to make a decent parcel. However, with more expensive items such as locos, and even coaches if 2+ are purchased together, it may pay me to shop around. For example, I have two Accurascale J68/9 on preorder. After VAT reduction they will be 117GBP each, so 234GBP the pair. Given they are likely to appear at the same time, if I order from Hattons I will pay 23GBP extra for them than if I order from a seller not adding GST, or even from Accurascale themselves. These are the items that I am looking at cancelling and ordering when they become available. I feel fairly safe in doing this as I cannot think of a recent main range release that has sold out prior to release. There is little advantage in 'trunking' loco models as their weight makes it worthwhile to post as a single item. 

 I don't wish to come across as miserly or a serial tax avoider, but like the example above, serious money can be saved assuming other suppliers fall below the reporting threshold. Think of the difference if you purchased a Heljan 104 3-car set and a Heljan LNER Garratt together and added a Hornby 'Coronation' rake!

Cheers from WestOz,

Peter C.

Edited December 9, 2023 by 45568
Price data updated.

[The Outcast]

I'm Australian, though I've not ordered anything with Hattons before (was, and still am, planning to bulk by the trackwork for the new layout from them). It's a shame that these taxes will make things much more expensive for those who do purchase from them regularly, especially during a cost of living crisis; though I understand they don't particularly have a choice here, given it's Australian law. 

 

 

[Enterprisingwestern]

 

As a beneficiary of Hattons overseas shipping programme, I think we all should be thankful that they didn't just say sod it and pull out of the market, although it's presumably worth it financially for them, they could have saved themselves a lot of hassle.

 

Mike.

[Downer]

6 hours ago, Hilux5972 said:

I haven’t received any such email. Was wondering if it will apply to us as well. 

I received one here in France.

 

[John M Upton]

I think people have to remember that actually everyone should be paying tax on all purchases regardless, it is only the way the system operated that gave many a nice discount with the only the occasional tax payment plus fee demand.  As IT accounting technology has improved, the Governments of many countries are simply closing the loop holes that many have been lucky to be able to take advantage of.

Edited December 9, 2023 by John M Upton

[ikcdab]

21 hours ago, jpendle said:

They get a 16.66666% reduction on prices shown on the Hattons website, or any other shops website, as do I and anyone else living outside the UK.

 

VAT is an ADDITIONAL 20% added to the price of the good, so before VAT if the price is £10 then the price with VAT is £12.

 

To get back to the price without VAT you need to divide 2 by 12 = 16.666%

 

Regards,

 

John P

 

Haha clever with with the maths there. You are right that 20% isn't being knocked off of the £12, but it's the 20% of the £10 that is being removed.

Whatever what you look at it, you areb saving the 20% VAT.

[45568]

10 hours ago, John M Upton said:

I think people have to remember that actually everyone should be paying tax on all purchases regardless, it is only the way the system operated that gave many a nice discount with the only the occasional tax payment plus fee demand.  As IT accounting technology has improved, the Governments of many countries are simply closing the loop holes that many have been lucky to be able to take advantage of.

Which is all fine and dandy, but then when you see reports that giant multi-national corporations like Google and Amazon, with massive sales in Australia, pay zero tax in Australia because of a very clever corporate tax structure, then I do begrudge the 'guvmint' chasing me for an extra $20 on a Jinty! I know the ATO are attempting to rein in these corporate behemoths, but in the words of my old school report..'must try harder'.

Cheers from WestOz,

Peter C.

[GWR-fan]

A simple search returned this.  Self explanatory,  the GST is on the value of the goods (collected by the non-resident seller) from the buyer.  

 

Quote:  "If you are a non-resident business and you sell goods into Australia with a customs value of A$1,000 or less, GST applies and you will have to collect this from your customer and send the GST to us. The customs value is the price the goods are sold for, minus freight and insurance from the place of export." (Note no mention of a threshold as regards annual sales).

 

EDIT:  from previous experience,  over $1000.00 value,  the customer becomes an importer and unless familiar with the paperwork involved then the serices of a customs broker will be required at additional cost.  If using a mainstream courier like say DHL then no doubt they would handle all the paperwork and charge accordingly.

Edited December 11, 2023 by GWR-fan
Additional information

[jjb1970]

3 hours ago, GWR-fan said:

A simple search returned this.  Self explanatory,  the GST is on the value of the goods (collected by the non-resident seller) from the buyer.  

 

Quote:  "If you are a non-resident business and you sell goods into Australia with a customs value of A$1,000 or less, GST applies and you will have to collect this from your customer and send the GST to us. The customs value is the price the goods are sold for, minus freight and insurance from the place of export." (Note no mention of a threshold as regards annual sales).

 

EDIT:  from previous experience,  over $1000.00 value,  the customer becomes an importer and unless familiar with the paperwork involved then the serices of a customs broker will be required at additional cost.  If using a mainstream courier like say DHL then no doubt they would handle all the paperwork and charge accordingly.

 

The government website explanatory page gives a threshold of A$75,000 sales connected with Australia or A$150,000 for non-profits to trigger overseas registration to collect GST.

[34theletterbetweenB&D]

On 09/12/2023 at 06:45, 45568 said:

...serious money can be saved assuming other suppliers fall below the reporting threshold...

The thought arises how many businesses would it require to limit their annual sales to Aus$74,999, while also satisfying Australian demand? Bound to be a tax specialist somewhere able to work out a fully legitimate mechanism on this basis.

[admiles]

On 09/12/2023 at 02:06, jjb1970 said:

 

What I objected to wasn't paying the VAT, as with all taxes it's not a voluntary payment and we should budget according to those liabilities, it was the handling charge. If I remember rightly the post office and parcel force charged about £13 to check parcels and collect the VAT, and parcels could sit in their Coventry international depot for weeks until being cleared. If they're going to charge £13 to check the customs declaration and send out a letter telling you how much you need to pay (noting cost of administration and collection is already part of tax rate setting) they could at least hire enough people to do the job quickly.

 

 

Not really as the tax paid (VAT as model railway items are free of import duty) goes to HMR&C. The £13 handling fee goes to Royal Mail for processing the Customs declaration.  Whether it's good value or not is open to debate!

 

By way of comparison my companies basic Customs clearance fee for commercial goods is £25.00 (to other forwarding agents) Importers pay a bit more! This can be for a 40' container.

[45568]

10 hours ago, 34theletterbetweenB&D said:

The thought arises how many businesses would it require to limit their annual sales to Aus$74,999, while also satisfying Australian demand? Bound to be a tax specialist somewhere able to work out a fully legitimate mechanism on this basis.

Further ruminations on this line of thought.

Without looking too hard at actual figures, I did wonder if the price rises we have seen in the model railway sector over the last four or five years have had some effect of pushing Hattons sales value over the magic $75,000 limit? I have no doubt sales volumes have increased for Hattons through the Covid period, certainly they were actively sending orders to me throughout that period, but, given that prices for model railway items have increased, even the same volume of sales will have a higher $ value. I wonder if Hattons have become a victim of their own success, certainly they have been my first choice supplier for over forty years, although problems with supply of certain ranges by them caused me to look elsewhere, and to my very pleasant surprise I now have two or three alternative suppliers. These businesses will also become my preferred suppliers in the future, as I have cancelled most of my current preorders with Hattons, stating as the reason their change in terms for export trade.

The danger being that if others follow my lead and transfer business to the same suppliers will they then pass the threshold value and need to take the same action as Hattons? (Lest anyone think otherwise, I am not 'blaming' Hattons for the changes, I realise that legally they had no choice), however, I still find the notion that they have been 'subsidising' overseas customers for the last few years a little odd.

Overall, I am sad to lose Hattons as a supplier, I cannot fault their services, but economically, whilst alternative sources are available, I must use my modelling dollars most effectively.

Cheers from WestOz,

Peter C.

[Jon Harbour]

I don't think the price rises are really to blame for Hattons suddenly having to pay the GST. Looking at my own pre-orders - I probably have in excess of $2,000 waiting with Hattons. It doesn't take much...  a couple of sound-fitted locos gets you up to about $800, throw in a set of coaches like the Dapol Toplights and / or a Rapido B-Set plus a few of the delightful range of 4-wheel wagons now coming along and you are easily well over a grand.

 

Given the size of Australia - I suspect there are more than 75 of us that buy from Hattons and probably have similar pre-order profiles! I can name at least two other members of my local club that have upwards of $300 in pre-orders with Hattons!

Edited December 12, 2023 by Jon Harbour
Fat fingers!

[kevinlms]

As I stated earlier, it's not hard to see that Hattons could easily sell $75,000 to Australia - but it is none of our business to know or ask!

 

It's not even $1500 a week. How many locos is that?

Edited December 12, 2023 by kevinlms
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