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

[Monkeh]

What, for example, do I do if I want to buy something from Welectron? Pay them their 19% VAT, somehow claim it back, pay another 20% VAT and a processing fee when it arrives here? Yeah, that sounds stupid - hence why I can no longer do small business with them. Them and thousands of other businesses we're now either locked out of or being penalised for using.

Shouldn't the free trade agreement mean you pay VAT in Germany and then the goods are shipped tax paid to the UK? As I understand it there should just be a customs declaration to be completed by the seller.

No. That's what we gave up!

[Fraser]

Helpful article on the new UK VAT rules in various scenarios.......

https://www.dlapiper.com/en/us/insights/publications/2020/12/uk-vat-changes-sale-of-goods-to-customers/

From what I can tell the UK HMRC has decided that all imports to the UK, including those between private individuals are liable for 20% VAT. There remain some Zero VAT rated items such as books etc. It would appear the same will be true for EU me beers when they change their rules on 1 July 21.

Fraser

[Fraser]

Helpful discussion on the eBay community. Well worth a read

https://community.ebay.co.uk/t5/Buyer-Central/Is-there-now-20-VAT-added-to-EU-purchases-I-noticed-this-morning/td-p/6835255

Fraser

[Fraser]

eBay seem to be having some issues applying the new VAT rules and even started adding 20% VAT on UK to UK transactions ! Details here.......

https://community.ebay.co.uk/t5/Seller-Central/VAT-added-to-items-I-have-for-sale-in-UK-seller-to-UK-buyer/td-p/6848957

Be observant when buying on eBay to make sure no inappropriate charges are being added to the purchase price.

Fraser

[IanB]

It looks like a complete mess to me. I foresee it being very difficult to buy things from overseas and have them shipped to the UK in the future. Many foreign sellers will decide it's not worth doing the paperwork to comply with the rules.

[Fraser]

A well known, and sadly, often true story.......

The Plan

In the beginning, there was a plan,
And then came the assumptions,
And the assumptions were without form,
And the plan without substance,

And the darkness was upon the face of the workers,
And they spoke among themselves saying,
"It is a crock of shit and it stinks."

And the workers went unto their Supervisors and said,
"It is a pile of dung, and we cannot live with the smell."

And the Supervisors went unto their Managers saying,
"It is a container of excrement, and it is very strong,
Such that none may abide by it."

And the Managers went unto their Directors saying,
"It is a vessel of fertilizer, and none may abide by its strength."

And the Directors spoke among themselves saying to one another,
"It contains that which aids plants growth, and it is very strong."

And the Directors went to the Vice Presidents saying unto them,
"It promotes growth, and it is very powerful."

And the Vice Presidents went to the President, saying unto him,
"This new plan will actively promote the growth and vigor
Of the company With very powerful effects."

And the President looked upon the Plan
And saw that it was good,
And the Plan became Policy.

And this, my friend, is how shit happens.


This version of the story was copied from http://web.mnstate.edu/alm/humor/ThePlan.htm

[MK14]

It looks like a complete mess to me. I foresee it being very difficult to buy things from overseas and have them shipped to the UK in the future. Many foreign sellers will decide it's not worth doing the paperwork to comply with the rules.

I massively disagree.

A relatively poor and tiny (business wise) seller, who only sells a few dollars of transistors from China. Sells some transistors for £0.10, to someone in the UK.
Now, the £0.02 worth of VAT can be collected by him. Ok, there is several pages of horrible paperwork, and they have to make an account on the UK Gov website and it takes them around 30 minutes or a few hours.

BUT the UK Gov gets their £0.02 (tuppence).

This is completely fair, and means the giant companies like Amazon, Apple, Google etc. Can continue avoiding paying £99,999,999,999,999,999,999,999 in taxes each year.

Completely fair   

[MK14]

It looks like a complete mess to me. I foresee it being very difficult to buy things from overseas and have them shipped to the UK in the future. Many foreign sellers will decide it's not worth doing the paperwork to comply with the rules.

On a more serious note. I agree with you, completely. I've sort of mentally resigned myself, to probably not buying much, from international markets, such as China.
At least until this current situation (VAT/paperwork, not Covid), settles down and hopefully get resolved.

I'm a bit annoyed the international supplier is given the duty (ignore pun) of documenting/collecting the VAT and maybe the duties.

I suspect this new policy (which seems to really come from the EU, rather than the UK, I suspect). Will back-fire.

They want huge amounts of paper work to be filled in, because someone buys a £0.99 pack of small electronics from a small Chinese seller, who is making pennies, or not much more, on each sale.

Maybe what would have been much more sensible, is to make the imports completely free of VAT and duties, as long as below some big number, such as £1,000.
But, introduce a new paypal/payments-system, charge of some sensible percentage, such as 7.5% of the paypal total costs. If it is outside of the UK (or EU, depending on where you are).
Then it would be really easy for everyone. No paper work or anything.

Getting the foreign sellers to have to do stuff like paperwork, for the EU/UK tax affairs, on low value items, such as £0.99 is probably not the best of choices. I suspect.

[mikeselectricstuff]

I still can't see how, when a package arrives in the UK, they can determine whether or not VAT has been paid on it by the shipper.

It _could_ in principle be done by the shipper having to register the transaction online when shipped, and get a unique code that gets put on the package as a QR code that's scanned at import, but I suspect they are nowhere near being able to implement that any time soon.

But even then it still sets the dangerous precedent that a seller has to register and account seperately to every single country they ship to, which would be a nightmare.

[Someone]

It looks like a complete mess to me. I foresee it being very difficult to buy things from overseas and have them shipped to the UK in the future. Many foreign sellers will decide it's not worth doing the paperwork to comply with the rules.

Marketplaces (eBay etc) and couriers (as they do already) will take care of the paperwork for small sellers but that cost will be passed on in the total price seen by buyers. Someone has to pay for the tax collecting expenses and the governments have realised it would be a loss making exercise to them so its been hand-balled to the sellers.

As people keep repeating, the sensible approach (for everyone other than the bureaucrats employed to do this work) has always been a tax free threshold somewhere between several hundred and several thousand dollarpounds. These disproportionate reporting/documentation requirements artificially increase the cost of small international transactions and entrench the existing models of large distributors (who love their unsubstantiated markups).

This is completely fair, and means the giant companies like Amazon, Apple, Google etc. Can continue avoiding paying £99,999,999,999,999,999,999,999 in taxes each year.

Gotta love their answers in the press about this which always comes back to the doublespeak "we pay exactly the amount of taxes that we have to".
https://en.wikipedia.org/wiki/Double_Irish_arrangement
Completely indecipherable to the general public.

[MK14]

Gotta love their answers in the press about this which always comes back to the doublespeak "we pay exactly the amount of taxes that we have to".
https://en.wikipedia.org/wiki/Double_Irish_arrangement
Completely indecipherable to the general public.

As I see it, someone in the UK earns (probably applies to most countries),

£20,000 a year, and pays a ball park figure of £5,000 a year in taxes.

A small business earns £200,000 a year, and pays a ballpark figure of £50,000 a year in taxes.

A huge PLC company in the UK, earns £20 Billion a year, and SHOULD have paid a ballpark figure of £5 Billion a year, in taxes.
But instead pays a team of expert tax avoidance tax accountants, £10,000,000 pounds a year, implements some tax heavens (like you linked to), and other changes to how they account for their earnings/profits/losses etc.
Hence paying only £50 million in taxes, instead of the ballpark £5 billion, they should have been paying.

Legal: Yes.
Morally acceptable, fair and good for society: Maybe not.

[SilverSolder]

It looks like a complete mess to me. I foresee it being very difficult to buy things from overseas and have them shipped to the UK in the future. Many foreign sellers will decide it's not worth doing the paperwork to comply with the rules.

On a more serious note. I agree with you, completely. I've sort of mentally resigned myself, to probably not buying much, from international markets, such as China.
At least until this current situation (VAT/paperwork, not Covid), settles down and hopefully get resolved.

I'm a bit annoyed the international supplier is given the duty (ignore pun) of documenting/collecting the VAT and maybe the duties.

I suspect this new policy (which seems to really come from the EU, rather than the UK, I suspect). Will back-fire.

They want huge amounts of paper work to be filled in, because someone buys a £0.99 pack of small electronics from a small Chinese seller, who is making pennies, or not much more, on each sale.

Maybe what would have been much more sensible, is to make the imports completely free of VAT and duties, as long as below some big number, such as £1,000.
But, introduce a new paypal/payments-system, charge of some sensible percentage, such as 7.5% of the paypal total costs. If it is outside of the UK (or EU, depending on where you are).
Then it would be really easy for everyone. No paper work or anything.

Getting the foreign sellers to have to do stuff like paperwork, for the EU/UK tax affairs, on low value items, such as £0.99 is probably not the best of choices. I suspect.

Isn't the real solution what they are already doing:  requiring eBay and the like to collect the VAT?

[IanB]

Isn't the real solution what they are already doing:  requiring eBay and the like to collect the VAT?

It's the wrong end of the supply chain. There's a 100+ countries in the world, and every seller in every one of 100+ countries is supposed to open an account with the revenue agencies of 100+ other countries, calculate and collect one of 100+ correct tax amounts depending on the customer's address, and then remit the proceeds to 100+ agencies afterwards?

It's nonsense.

Revenue should be collected when the goods are received, not when they are dispatched. If someone sends you a package from China where VAT is owed, you should simply have to go to your local Post Office, pay the VAT over the counter, and collect your package.

[SilverSolder]

Isn't the real solution what they are already doing:  requiring eBay and the like to collect the VAT?

It's the wrong end of the supply chain. There's a 100+ countries in the world, and every seller in every one of 100+ countries is supposed to open an account with the revenue agencies of 100+ other countries, calculate and collect one of 100+ correct tax amounts depending on the customer's address, and then remit the proceeds to 100+ agencies afterwards?

It's nonsense.

Revenue should be collected when the goods are received, not when they are dispatched. If someone sends you a package from China where VAT is owed, you should simply have to go to your local Post Office, pay the VAT over the counter, and collect your package.

But that's exactly what eBay does - they collect from the buyer, when they buy (and give the money to the country that the buyer lives in).   

The buyer and seller don't have to worry about anything other than Customs and Shipping if the transaction is done through eBay.

An obvious improvement could be if eBay also collected Customs charges on behalf of the country the buyer is in...  that way, nobody has to worry about anything, the price plus shipping gets clearly defined up front, everybody happy?

[Nauris]

I suspect this new policy (which seems to really come from the EU, rather than the UK, I suspect). Will back-fire.

They want huge amounts of paper work to be filled in, because someone buys a £0.99 pack of small electronics from a small Chinese seller, who is making pennies, or not much more, on each sale.

...

Getting the foreign sellers to have to do stuff like paperwork, for the EU/UK tax affairs, on low value items, such as £0.99 is probably not the best of choices. I suspect.

I took some time and read some EU papers and this is totally different than how EU intends to do this.
EU legislation works like this (from June 2021) :

1. It is an OPTION for non-EU seller/marketplace to register for IOSS scheme to prepay VAT. (needs tax representative in EU)
It is very clearly stated that this is not mandatory.

2. Post/Courier collects it (and charges an fee)

3. Regular way (at the customs)

So basically you can collect VAT and then your products don't need to wait at customs -> fast delivery, happy customer.
But if you don't want to bother that is fine also but then your customer needs to wait more and pay the handling fee.

I think it is rather good approach. Ebay, Amazon etc with big volumes will surely register to make shopping easier but smaller outfits can just leave it to the post/courier like before.

https://ec.europa.eu/taxation_customs/sites/taxation/files/vatecommerceexplanatory_28102020_en.pdf

[Monkeh]

So a little looking around finds this: https://www.legislation.gov.uk/uksi/2018/1376/contents

E: And as they slowly trickle updates, that legislation is revoked so now I need to figure out what replaces it.

[Fraser]

The latest story on the VAT surprise .......

Brexit parcel price shock: 'I had to pay £30 for a gift' https://www.bbc.co.uk/news/business-55752541

It appears many thought that VAT between UK and EU countries was not going to change. There will be many who are surprised by the addition of VAT as confusion surrounds the EU UK free trade deal.

We always paid VAT in the past though, it was just the VAT of the country we bought from that was part of the buying price. The issue occurs if the seller includes local VAT in the price then adds additional UK VAT on top so the buyer pays VAT twice !

The other issue is VAT now being added to all used items imported into the UK so your simple eBay purchases from outside the UK just got 20% more expensive despite being personal P2P transactions or gifts over £39.

Such is life I suppose.... Death and Taxes, Death and Taxes   

There were always going to be some negative consequences to leaving the EU and such should have been expected. Theoretically, there are positives to offset such negatives though. The changes to the VAT system in the UK on 1st January have been a surprise to many though.

Fraser

[olkipukki]

The latest story on the VAT surprise .......

"I was shocked, because I thought that with the Brexit deal, this wouldn't happen," he  said.
   
 

[Fraser]

Yes it is early days and the nightmare that was the BREXIT negotiations has many confused about what was actually agreed in the end. It is not always in the interests of Politicians to tell the public “the whole story” 

I suppose the additional VAT will help to pay towards the massive Coronavirus debt that we will have though so it is just additional taxation in time of need. Someone has to pay for all the outgoings of our country after all. Paying as you spend on imports is likely fairer than an increase in ‘across the board’ taxes. They may still come of course!

I certainly would not want to be the Chancellor during these very challenging times !

I told my wife that a sensible way forwards would be for all countries leaders to get around the table, decide how much Coronavirus has cost to date per country on average, project short term future inoculation costs and come up with a figure that is the “Coronavirus write-off”. Then every country is allowed to print that sum of money or add it to their countries reserves. If all countries do it, no hyperinflation and no crazy debt to worry about. Maybe I should run for UK PM 

Fraser

[MK14]

I suspect this new policy (which seems to really come from the EU, rather than the UK, I suspect). Will back-fire.

They want huge amounts of paper work to be filled in, because someone buys a £0.99 pack of small electronics from a small Chinese seller, who is making pennies, or not much more, on each sale.

...

Getting the foreign sellers to have to do stuff like paperwork, for the EU/UK tax affairs, on low value items, such as £0.99 is probably not the best of choices. I suspect.

I took some time and read some EU papers and this is totally different than how EU intends to do this.
EU legislation works like this (from June 2021) :

1. It is an OPTION for non-EU seller/marketplace to register for IOSS scheme to prepay VAT. (needs tax representative in EU)
It is very clearly stated that this is not mandatory.

2. Post/Courier collects it (and charges an fee)

3. Regular way (at the customs)

So basically you can collect VAT and then your products don't need to wait at customs -> fast delivery, happy customer.
But if you don't want to bother that is fine also but then your customer needs to wait more and pay the handling fee.

I think it is rather good approach. Ebay, Amazon etc with big volumes will surely register to make shopping easier but smaller outfits can just leave it to the post/courier like before.

https://ec.europa.eu/taxation_customs/sites/taxation/files/vatecommerceexplanatory_28102020_en.pdf

Sorry for the late response. Somehow, I missed your original reply, until the thread got posted to again, today.

To a reasonable extent I agree with you.

I expect that eventually thinks will settle down.

[madires]

We always paid VAT in the past though, it was just the VAT of the country we bought from that was part of the buying price. The issue occurs if the seller includes local VAT in the price then adds additional UK VAT on top so the buyer pays VAT twice !

Unfortunately some sellers have problems understanding VAT. If an EU seller send goods to a buyer in the UK, he doesn't have to bill VAT: https://www.accountancyeurope.eu/publications/vat-customs-duty-and-brexit-prepare-now

[SilverSolder]

[...] The issue occurs if the seller includes local VAT in the price then adds additional UK VAT on top so the buyer pays VAT twice ! [...]

Yes, the EU based sellers now have to treat the UK as an export - which is of course more hassle, so many sellers choose to leave the price alone and pocket the difference as a fee for the extra processing!

[...]The other issue is VAT now being added to all used items imported into the UK so your simple eBay purchases from outside the UK just got 20% more expensive [...]

eBay and Amazon in the US collect sales tax on all transactions now, even used stuff sold privately. 

In a way, this has now given an advantage to smaller sites that don't do that.

[SilverSolder]

[...]
I expect that eventually thinks will settle down.

Yes, but it will settle on a generally higher price level (for UK consumers).  As I noted above, sellers of small items are not going to bother with VAT refunds etc. in most cases, it's just too much hassle. 

The price of freedom, innit?

I know several UK sellers that work that way too - i.e. an international customer gets to pay the UK price including UK VAT,  and seller does not refund that VAT.  Talking about VAT refunds would only be entertained for bigger ticket items.
 

[MK14]

Yes, but it will settle on a generally higher price level (for UK consumers).  As I noted above, sellers of small items are not going to bother with VAT refunds etc. in most cases, it's just too much hassle. 

The price of freedom, innit?

I know several UK sellers that work that way too - i.e. an international customer gets to pay the UK price including UK VAT,  and seller does not refund that VAT.  Talking about VAT refunds would only be entertained for bigger ticket items.

Not necessarily higher, possibly lower prices, in a number of cases.

Hypothetical example, but hopefully typical of what eventually happens. I just don't know the details and which countries will be involved:

Before Brexit, buying ebay US items in the UK, could have meant. Very high postal charges, big VAT/Duty bills, and big administration fees from the delivery company, plus possibly delays.

So, there could be powerful trade deals now, e.g. with the US.

Which could then mean, greatly reduced postal charges, easier/reduced VAT/duty (i.e. Tariff free or reduced), and hence no extra delivery charges or delays.

Possibly wishful thinking on my part, though 

But let's see.

[Monkeh]

There were always going to be some negative consequences to leaving the EU and such should have been expected. Theoretically, there are positives to offset such negatives though.

I'm still waiting to hear any well thought out theories of positives, let alone any indication of actually seeing a positive.