UK abolishes <£15 VAT free imports. EU to follow.

[Fraser]

For those unaware, I was made aware today by Forum member Ultrapurple that eBay UK are adding VAT to sales from China. I did some digging and sure enough, as of 1st January 2021 the UK has abolished the £15 VAT free import threshold. A new £135 threshold has been introduced. ALL imports to the UK below £135 are liable to VAT collection at source (point of sale) and all imports above £135 require the usual importation value declaration and payment of VAT by the buyer before delivery.

Apparently the £15 VAT free threshold was originally intended to reduce the workload on HMRC and its collection agents. The Low value VAT relief system was seriously abused though. Items were undervalued to come in under £15 and avoid VAT. That loophole has now been closed and the responsibility for collecting the VAT falls to the seller or marketplace fir all items under £135.

On a positive note, maybe this will avoid the awful paperwork fees that many courier companies and postal services used to charge on lowish value item VAT collection. Example .... Say an item costs £20 and £4 VAT is due BUT there is a £12 paperwork fee from the courier to pay !

Times, they are a changing in the UK.......

Fraser

[Fraser]

Articles on the changes....

https://tamebay.com/2021/01/have-vat-changes-for-online-marketplaces-levelled-the-playing-field.html

https://www.avalara.com/vatlive/en/vat-news/eu-2021-ending--22-import-exemption--import-oss-returns.html

The EU is going to follow this same strategy in mid 2021

[mikeselectricstuff]

So how exactly are they going to police collection from foreign sellers ?

[Fraser]

Mike,

Not sure how this is going to work in reality but there is no longer any VAT relief below £15. An independent (non-eMarketplace) seller could undervalue a sale but exactly how that would be policed I do not know. eBay have already applied the change so I have seen all my low value watched items increase in cost since 1st January. I have read that FedEx have previously been challenging suspicious package valuations by requiring buyers to provide proof of purchase documentation with full cost details.

It is early days but we can kiss goodbye to VAT free imports of CD’s, DVD’s and ink cartridges from the Channel Islands !

Fraser

[DC1MC]

Speaking of which Fraser, will I ever get my fireman propeller camera from a long while ago when you're clering your inventory ?

DC1MC

[tszaboo]

I believe for the EU the plan is to only implement it in half a year.
They are supposed to provide simplified paperwork for these items, simpler than CN22.
And the seller should collect the VAT, not the shipper. I expect that ie Aliexpress will charge extra 20% or so for these small items, and the entire loophole will be closed. I'm not sure how well this will work for smaller companies, or PCB houses.
I'm not really troubled by the tax, the customs processing fees are the real problem. And the pickups that come with it. I'm really not looking for standing in line to collect an 1 EUR item in an overpriced shop in the city center (without parking), paying 10 EUR for this privilege.

[sleemanj]

So how exactly are they going to police collection from foreign sellers ?

I expect the same way NZ and probably AU does... namely, they don't because they only need to catch the big fish.

The big name marketplaces complied when we did the same (all-be-it begrudgingly), Aliexpress, eBay, Amazon and that far more reliably covers like 90% of these low value imports I imagine.  The rest is small fry that if they comply, bonus, if they don't, not worth chasing. 

[CJay]

So how exactly are they going to police collection from foreign sellers ?

I have a very unpleasant feeling that this might fall on the buyer if they can't verify/track down the seller has paid it, best case many direct transactions will just carry on as normal, mid scenario might mean we still end up with VAT and collection fee to pay and worst, it might get confiscated/destroyed at customs if they can't track down or prove the duties have been paid

If it's worst case then it will be bloody difficult if not impossible to get  a refund.

[tszaboo]

So how exactly are they going to police collection from foreign sellers ?

I have a very unpleasant feeling that this might fall on the buyer if they can't verify/track down the seller has paid it, best case many direct transactions will just carry on as normal, mid scenario might mean we still end up with VAT and collection fee to pay and worst, it might get confiscated/destroyed at customs if they can't track down or prove the duties have been paid

If it's worst case then it will be bloody difficult if not impossible to get  a refund.

They went after ebay a few years ago. Now they just add this to every item: "Customs services and international tracking provided"
They charge all the tax amd fees up front.
Since then, I didn't had any issue with ordering anything from ebay. Hopefully it will be like this.

[Fraser]

DC1MC,

The changes will not effect selling used items from the UK to you in Germany via a private sale.

Regarding the Talisman BST thermal cameras. From memory you wanted one that was tested working or an easy repair ? I just have not had the time to test the cameras and sadly it is unlikely that I can spend time determining whether any faulty units are an easy repair as I would just spend the extra few minutes repairing the unit myself.
Sadly the Talisman cameras are not of very high value so they slipped down the priority list in favour of higher value item sales. I might be able to supply Talisman cameras to you but they will be ‘as found’ with no diagnostic work by me before shipped. That is an unknown risk for you though. I never want to sell something that disappoints a buyer so in cases where an  item is an unknown, I often will not sell it rather than risk any disappointment.

Fraser

[CJay]

So how exactly are they going to police collection from foreign sellers ?

I have a very unpleasant feeling that this might fall on the buyer if they can't verify/track down the seller has paid it, best case many direct transactions will just carry on as normal, mid scenario might mean we still end up with VAT and collection fee to pay and worst, it might get confiscated/destroyed at customs if they can't track down or prove the duties have been paid

If it's worst case then it will be bloody difficult if not impossible to get  a refund.

They went after ebay a few years ago. Now they just add this to every item: "Customs services and international tracking provided"
They charge all the tax amd fees up front.
Since then, I didn't had any issue with ordering anything from ebay. Hopefully it will be like this.

I hope it remains that way, as it stands it makes very little difference to eBay sales as far as I can see, they're a little bit more expensive because VAT at point of purchase.

Cynical me thinks this has actually made the situation worse, sellers outside the UK (and later outside the EU) may just decide it's not worth the bother to send to us.

I suspect it will make the dominance of Amazon, eBay and the huge multinationals even greater and businesses that wish to sell outside those channels could be forced out of the marketplace.

[Fraser]

I have already read of one importer of parts from China who was told by his supplier that they were ceasing supply to the UK due to the increased paperwork overhead. He was negotiating with the supplier to sell him consignments that exceed the £135 threshold so that the shipment collects VAT at the destination rather than point of sale. I have not heard whether the seller was interested in that arrangement.

Fraser

[tszaboo]

Cynical me thinks this has actually made the situation worse, sellers outside the UK (and later outside the EU) may just decide it's not worth the bother to send to us.

I suspect it will make the dominance of Amazon, eBay and the huge multinationals even greater and businesses that wish to sell outside those channels could be forced out of the marketplace.

I truly believe most citizens in the UK will spend most of their time robbing pharmacies for basic medicine and supermarkets for the last rolls of toilet paper in about 1 week. Buying internationally will be impossible, since the GBP will be valued somewhere near the Turkish lira.
But at least big companies will have fish. Or something like that.
And sorry to say, but it will be well deserved. You had 4 years to throw your politicians in the Thames and change your mind.

[wraper]

Based on how it happens with other countries, likely you can simply make a fake label showing that tax is paid. For example for Norway add: VOEC NO:2024926 Code:Paid. 2024926 is simply ebay tax payer code, no sale identification at all.

[Fraser]

NANDBlog,

That is an unnecessary inflammatory statement and there are an awful lot of people who you know will not agree with you so why make it ? This thread has nothing to do with BREXIT so why try to bring that into the conversation eh ? As for us suffering a valueless Pound or being in desperate need of pharmaceuticals and loo roll......  You severely underestimate the United Kingdom and it does you no credit.

Fraser

[SeanB]

Here the solution was to simply charge a "handling fee" on all incoming small packet and small parcel items, and if the declared value total for a year exceeds a threshold you have to pay customs duty on the lot every year end. Does mean a $1 with shipping packet, comes in with you having to pay $2.50 as fee. Sucks if the order was sent as 5 or 10 small packets if you ordered multiple, as the seller has them ready packed and just puts the sticker on it, then dumps it into a bag to go via China post. Only way the Post office is going to make any money, as almost nobody sends actual mail these days, and sending a parcel by them is also expensive, and not guaranteed to be delivered at all.

[tunk]

In Norway this was introduced 1st april 2020; at checkout
eBay adds 25% VAT. The sellers are supposed to mark the
shipment with a code to say that VAT has been paid. This
does not always happen, so I've added it in "street address 2".

[Zucca]

I am wondering what US will do or are they already doing it?

[CJay]

In Norway this was introduced 1st april 2020; at checkout
eBay adds 25% VAT. The sellers are supposed to mark the
shipment with a code to say that VAT has been paid. This
does not always happen, so I've added it in "street address 2".

Handy tip, thank you.

[Monkeh]

This thread has nothing to do with BREXIT

Well, it does, because if it weren't for Brexit we'd be bringing this in in six months along with the rest of the EU in a unified system which would be far less disruptive to our trade.

[CJay]

This thread has nothing to do with BREXIT

Well, it does, because if it weren't for Brexit we'd be bringing this in in six months along with the rest of the EU in a unified system which would be far less disruptive to our trade.

I *think* that businesses only need to register in one EU country (Harmonized System) to sell to all EU countries.

But we're no longer in the EU.

We haven't even got the fish.

[madires]

Over here a non-EU seller who sells his stuff to consumers via Amazon/ebay/etc. needs to register with a specific tax office and has to pay VAT. Because many non-EU sellers don't register (and don't pay VAT) there are changes under way to make the market platforms liable for the black sheep. So the market platforms have to verify that sellers are registered before allowing them to sell to German consumers. There will be also rules to help the tax office to check sales amounts. Besides that we have a < EUR 22 VAT free import which is also abused massively. So this exemption might change too in the future.

[Fraser]

Reading what some manufacturers and suppliers in the UK have said about this change, it appears to be very popular and many have complained that it has taken so long for HMRC to bring it in. On this matter, we are ahead of the EU. What these UK businesses said was that the Chinese sellers have benefitted for too long from low shipping costs combined with avoiding charging VAT on what they sell to the UK and this provided an unfair advantage over UK domestic sellers of products. When I think about the items I have bought from China that have arrived in  week or two and the total cost, including postage was less than the UK postage alone would have been! How were UK sellers supposed to compete with that ?

Looking at this change from the domestic sellers positions, It does seem fair and a benefit to domestic companies. Legitimate manufacturers using Chinese sourced parts should not be effected as they tend to buy in bulk and are already paying whatever import fees are applicable. On a selfish note, it might increase my ‘toy’ costs a little but it also avoids the situation I have experienced where a £20 item costs me £4 VAT but also £8 or £12 carrier paperwork fees ! Now I will pay the supplier £24 and that is it, no courier fee (hopefully).

The subsidised postage in China remains a cause of annoyance to UK sellers however. How can an item be shipped from China to the UK and cost less shipping than UK to UK domestic post ?

Fraser

[CJay]

The subsidised postage in China remains a cause of annoyance to UK sellers however. How can an item be shipped from China to the UK and cost less shipping than UK to UK domestic post ?

Fraser

It's very simple, it's an international agreement, the seller pays postage for the item to get to the shipping centre and be processed, then the recipient country's mail service continues the delivery on receipt of the goods into the country.

It's a reciprocal arrangement which means China pays the delivery from receipt to buyer.

Royal Mail are the ones ripping us off. not the Chinese

[Monkeh]

On this matter, we are ahead of the EU.

Well, actually, the law which brought it into force on Friday was probably from the EU. We just didn't get the revision which pushed it back to allow sellers more time to get organised, which means we're now shooting ourselves in the foot internationally.