Hattons to Charge Local Taxes on Overseas Purchases

[Keegs]

I live in New Zealand and also didn't receive this email, rather worrying as I also couldn't find anything on hattons website about the forthcoming change.

 

So I sent an email to hattons who promptly responded with this:

 

Hello ,

 

Thanks for getting in touch.

 

I've checked your account and found you're unsubscribed to our newsletter, which is why we did not send you the email advising of the changes to GST.

 

I'm sorry, but we do not have an exact date for this change.  We are still working on the implementation of collecting GST, but we will update our website as soon as we launch the update.

 

To clarify, this change will affect both Australia and New Zealand.  

 

I hope this information helps, but please let me know if you have any additional questions. 

 

It's certainly not helpful having no set date and I'm wondering how much notice they will give before they implement it.

I have created an account with TMC and moved my loco preorders across because they (as far as I can tell) are under the threshold as they are much smaller than Hattons. This has the added advantage of ordering models with their excellent weathering service and assuming there is no gst it works out roughly the same as Hattons will cost me in the future.

 

I will still use hattons for the indivdual wagon releases and their pre-owned stuff as the Trunk is very handy for saving on shipping costs -even with the additional 15% gst!

 

New Zealand model shops generally have shocking prices (at least double for most items) and they offer very little outside the Red boxed stuff.

[melmerby]

This appears to be tax authorities in general around the world tidying up the tax on imports.

In the UK ebay charges VAT on items from the EU up to €135/£125, above that you pay on receipt, plus the courier handling charge. The ones I have used do remove local tax first.

Other non Ebay sellers in Germany that I have bought from all remove the local tax before despatching and now include a custom declaration. Whether you get caught for UK VAT or not is pot luck, so far I've been lucky.

 

Even AliExpress now charges UK VAT and the prices are inclusive.

 

So you poor souls down under have now been trawled into the same boat.

[dpgibbons]

The tax rules in Oz remain far more permissive than in the EU. Only a few UK model railway retailers are likely to reach the threshold for charging Australian GST at source, whilst the rest can ship orders up to A$1000 without GST being levied at the border. 

[Gridiron]

On 22/12/2023 at 21:18, melmerby said:

This appears to be tax authorities in general around the world tidying up the tax on imports.

In the UK ebay charges VAT on items from the EU up to €135/£125, above that you pay on receipt, plus the courier handling charge. The ones I have used do remove local tax first.

Other non Ebay sellers in Germany that I have bought from all remove the local tax before despatching and now include a custom declaration. Whether you get caught for UK VAT or not is pot luck, so far I've been lucky.

 

Even AliExpress now charges UK VAT and the prices are inclusive.

 

So you poor souls down under have now been trawled into the same boat.

 

The advent of online selling has raised many issues for governments around the world as far as taxation is concerned particularly on where the sale takes place and thus the jurisdiction the sale falls under for the purposes of taxation. We all know the claims that the likes of Amazon, Ebay, Google, Apple and Microsoft should pay more taxes but what is often missed is there are now thousands if not millions of small traders also selling on line globally earning profits outside their country of residence or incorporation.  This is therefore not just a question of VAT/GST/Sales Tax and how it is applied or not applied, it's a question of taxation fairness.  Your local model railway shop in Australia, New Zealand, Canada, the USA and EU all have to comply with the taxation rules of the local jurisdiction for employees, as well as their property and pay tax on the profit's the earn on the business. If your an online trader selling globally potentially you have fewer of these costs, so you can discount your sales and for all the reasons that have been stated in previous posts buyers will be switch their purchasing habits, which ultimately may see your local model shops struggle resulting in less choice in the local market place. 

 

What is happening around the world now is part of a movement that started in the UK about ten years ago when the then Chancellor George Osborne announced in a budget steps to tackle the huge problem of online trading and taxation requiring fulfilment organisations such as Amazon and Ebay as well as numerous other providers to take steps to ensure their customers were paying the correct amount of customs duty and taxes.  At this point, it may be worthwhile to explain that historically speaking the customs rules were largely based on the assumption that the importer would be resident in the country of destination and they would therefore account for any duties and taxes (ie VAT/GST/Sales Tax) locally at the time of import. In the EU for example a trader would be required to hold an EORI number allowing them to import in any EU State although this has never applied to private individuals. This sort of fudged the issue of differing levels of VAT within the EU which remains governed by the individual states, including now post Brexit UK were it can be difficult to determine from the Government website exactly what is required because the guidance is all over the place and includes links to documents that have been withdrawn. 

 

The latest version of the customs rules in the EU and still applicable in the UK, is the Union Customs Code from 2013 which reinforced earlier rules which introduced the concept of representation which governs the liability rules party making the customs declaration on behalf of the importer of which there are two rules Direct Representation and Indirect Representation.  Under Direct Representation the declarant (ie usually the freight forwarder, or courier) is required to hold written authority from the importer to clear the goods in their name and usually evidence of clearance instructions from the importer of the nature the goods including usually the commodity code, Eori and VAT numbers, as well as customs any other relevant information. This is why UK & EU buyers will often receive forms to complete before the courier or agent will clear the goods, a policy usually followed elsewhere in the world. Under Direct Representation the liability for accuracy of the declaration, customs duty and VAT becomes the responsibility the importer declared on the import declaration which must be submitted electronically. Under Indirect Representation, the party making the customs declaration becomes liable for the accuracy of the declaration as well any outstanding customs duty and/or VAT. As UK Customs can legally claim any additional duty & VAT under the rules for up to three years from the date of the customs declaration, and potentially longer if it's deemed that criminal intent took place, Indirect Representation is fast becoming an issue for many customs brokers, couriers and agents because potentially they could receive claims for unpaid duty & VAT years after a shipment was delivered with little prospect of being able to recover the costs especially if the  principal is overseas.

 

This brings us to another important provision of the rules, the question of the status of the legal entity of the importer as under Direct Representation the importer must be a legal entity in the UK, or EU but rather strangely this is not defined in UK law but UK Customs (HMRC) will likely refer to VAT regulations which on the basis previous legal action define the legal entity  as being a party physically established in the UK, owning or leasing buildings, where board meetings may take place, and services provided as well as  purchase orders/invoices are issued. The rules require the broker/customs agent to exercise due diligence before making any declaration and this an area in which HMRC and EU customs authorities are currently very active as they try to crack down on evasion of customs duty and VAT, as well as other taxes due to the authorities let alone fake or substandard  goods across the UK and EU for which the declaration can become liable under Indirect Representation.

 

At this point, it's worth pointing out that prior to the introduction of the new rules, companies wishing to trade in the UK could secure an EORI and VAT number from HMRC with relative ease and without much checking to the legal status of the entity, which could simply be a nameplate on an accountants door or wall, if they really pushed the boat out. It's not unusual to come across companies like this today, but when HMRC first started to carry out more checks they found instances of multiple "companies" being registered to a single address, with one rumour being they found over 300 companies registered to a single address in Manchester, occupied by a Chinese chip shop. When these types of companies records are checked it usually transpires they are not registered at Companies House and therefore never file their UK profits and therefore don't pay any taxes on their profits, apart from being responsible for many instances of importing fake or substandard goods.

 

Another major issue that was known to occur was the value of the goods being declared. It was not unknown for the on line trader to quote a price on line inclusive of UK VAT but when the goods are shipped, a separate invoice is issued with a considerably lower value, with the knock on effect that less duty and VAT is paid to HMRC and the difference is pocketed by the online trader. Buyers may also notice the invoice accompanying the goods does not always show the same value as the purchase value on line, and also may not contain their name as the buyer. These are all likely signs of customs rules being broken and buyers should beware.

 

Whilst I appreciate this content has drifted somewhat from the original content it does illustrate the way customs organisations around the world are working towards having common standards and why highly reputable organisations like Hattons are having to make changes to their online offering to ensure they and their partners remain compliant with local customs regulations.  

 

  

[kevinlms]

So much for the big debate on this topic and what Hattons are doing!