New VAT rules mean websites worldwide no longer selling to UK customers

C

cseal

Member
I was wondering if anyone else has noticed this.  As of Jan 1, the onus has changed on who is responsible for paying VAT on goods shipped to UK customers.  The result is many companies no longer selling to UK customers.  This is not about leaving the EU (the new rules apply to companies worldwide; it just happens to have come in on the same date). 

The UK Government now expects foreign businesses to register with HMRC so that they pay the VAT instead of the purchaser on import to the UK. It's called 'Supply VAT' instead of 'Import VAT'.  So guess what - lots of smaller companies (inside the EU and worldwide) are saying sod that - we won't sell to UK customers.  Why on Earth would they?  Imagine if they had to register with the tax offices of all the countries they sell to and then file quarterly returns!  Of course for big companies (Amazon, eBay, etc) with a high volume of trade, it's worthwhile complying.

The rules apply to business they call 'Online Market Places' (OMP).  To be classfied as n OMP, a company must do all three of
  • in any way sets the terms and conditions on how goods are supplied to the customer
  • is involved in any way in authorising or facilitating customers? payments
  • is involved in the ordering or delivery of the good
(see https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces)

So that's pretty much any website selling goods then.  The impact is most felt by many smaller websites such as those selling specialist parts e.g. electronics for caving, LED lamps.  Companies no longer selling to UK customers include http://www.international.mtnelectronics.com/ (US based), www.leds.de (Germany) and www.dx.com (Hong Kong based I believe).  The BBC had some headline about this the other week but it was written as if it's a consequence of Brexit, which it isn't as far I can tell - it's the result of a wider change in how the UK treats every online seller in the world.  See https://www.bbc.co.uk/news/business-55530721 

For me, it's mainly an annoyance as I like to play with building my own lights etc for fun but it's not my livelihood. I imagine for others it's a much bigger problem.  Was this really the intended outcome of the law?

Anyway - I was wondering about other people's views, experiences and/or solutions.

Chris
 
paul

paul

Moderator
Yes I have seen some warnings on ex-UK websites about possible delays due to VAT changes with Brexit but so far the warnings have implied the delays won't be very long and should soon be resolved.

For example Saloman.com  currently has

"New Brexit restrictions have impacted our normal UK shipping services as follows:

    Order deliveries may be delayed
    Express shipping is temporarily suspended
    Deliveries to Northern Ireland are suspended until further notice

We aim to get back to normal service as soon as possible and in the meantime we?ll provide updates as often as possible. We?re sorry for the inconvenience and thank you for your patience!"

The Trangia website at https://trangia.se/en/ did have a similar warning a little while ago but that seems to have gone now.
 
C

cseal

Member
Thanks Paul.  I note Trangia has decided to register with the UK taxman and they then add the 20% VAT.  See https://shop.trangia.se/en/terms-conditions.html

However there will be other webshops that just decide not to bother.  One reply I had from a company wrote
Hi Chris,

A new tax law was passed in the UK that does not allow small businesses like ours to send any packages to the UK without having a special UK tax number, filing UK taxes several times a year, etc.  Unfortunately, we do not have the time and manpower to do that currently, so we have had to suspend shipments to the UK indefinitely. 

Sorry for the inconvenience.
Click to expand...

I completely understand their point of view.  Imagine the horrendous paperwork they'd have to do if all countries followed the UK's example.
 
jcarter5826

jcarter5826

Member
Yes. It?s stung me. Not caving equipment mind. Pro audio gear from German shop incurred extra fees and customs etc.. etc...


Sent from my iPhone using Tapatalk and usage of fingers
 
Mr Mike

Mr Mike

Active member
I would say it is more to do with what the terms are that the supplier is selling on. Just from my own business experience.

I buy electronics parts from EU and US companies, their supply arrangement is DDP (duty and customs fees paid), no surprises for me and seamless ? these are however big distributors that send their goods directly from the base country ? they will have a ?office? based in the UK with VAT registration etc?, hence they can do this nice and easy. I?ve not really experienced any delays yet out of 20 or so deliveries this year.

The smaller company outside the UK can happily send to the UK sold goods as is, but the receiver will have to pay any VAT and duty along with a courier admin charge. This is standard practice, as a company I deal with this all the time, but for an end customer it can be a right inconvenience as it involves ?surprise? charges. I?ve received printed circuit boards from China since 01/01/21 and those have come through as per usual. The Chinese company I use does not have a UK VAT number, they come via DHL, a few days later I get the bill for the VAT and duty along with their admin charge that I pay.

I wonder if this VAT charging etc? has come in as so many goods that come into the UK that people buy online from overseas sites come in ?under the radar? and there is vast VAT revenue lost. Items in the post labelled as gifts, samples, or deliberately under valued to avoid duty and VAT.

I think the BREXIT trade online documentation portal is a right balls up, not very clear ? a quagmire of chasing tails. I?ve been reading with despair preparing for BREXIT as about 50% of my trade is with EU. The best info I have got is actually from the couriers I use (UPS and Fedex) and it turns out it?s not that bad after all once you know what you are doing. I?ve sent 3 shipments to the EU, now and the paperwork needed is minimal for what I am doing.

Key points are that I need to provide my EORI number, have my customers EORI number, terms of shipping, tariff code for the goods and an appropriated statement saying they goods are of UK origin and subject to UK/EU preferential origin. Like wise the same for goods coming in.

As already mentioned by others, this might all be a bit overwhelming for the small company sending to the UK, but I would say that if they are already sending large quantities worldwide, they should be able to do it. I am a one-man company and I can do it.

This is just my experience since start of BREXIT, but there well may be more nuances to this than I have encountered or know about.

Before BREXIT, a EU VAT registered company would have charged you the VAT (unless you are VAT registered) and just sent the goods. Duty would not come into it.
 
mrodoc

mrodoc

Well-known member
Brexit was a stupid idea and not thought through. I have already had one bill to pay on what was actually a birthday gift.  I was used to pay import duty on stuff coming from the USA (where's that wonderful deal then) but now it's from Europe. Bang goes any kind of free market. 
 
P

phizz4

Member
As I understand it, if the gift is worth less than/cost less than ?39 it is free of VAT and Import Duty. Over ?135 it attacts both VAT and Import Duty.
 
royfellows

royfellows

Well-known member
cseal said:
So that's pretty much any website selling goods then.  The impact is most felt by many smaller websites such as those selling specialist parts e.g. electronics for caving, LED lamps.  Companies no longer selling to UK customers include http://www.international.mtnelectronics.com/ (US based), www.leds.de (Germany) and www.dx.com (Hong Kong based I believe).  The BBC had some headline about this the other week but it was written as if it's a consequence of Brexit, which it isn't as far I can tell - it's the result of a wider change in how the UK treats every online seller in the world.  See https://www.bbc.co.uk/news/business-55530721 

Chris
Click to expand...

Just been on DX website, Free shipping to UK
Where did you get this from?
 
nickwilliams

nickwilliams

Well-known member
This is a Europe wide change, not a Brexit related UK thing. It will be a PITA to start with but actually most smaller companies selling on line use one of a number of bought-in shopping cart systems which will do the heavy lifting of the admin for them once the rules have been clarified a bit.

I expect Amazon will also deal with this for its Market Place vendors. e-Bay has a different relationship with its suppliers and their customers and may have more trouble intervening to make life easier for them.
 
C

cseal

Member
royfellows said:
cseal said:
So that's pretty much any website selling goods then.  The impact is most felt by many smaller websites such as those selling specialist parts e.g. electronics for caving, LED lamps.  Companies no longer selling to UK customers include http://www.international.mtnelectronics.com/ (US based), www.leds.de (Germany) and www.dx.com (Hong Kong based I believe).  The BBC had some headline about this the other week but it was written as if it's a consequence of Brexit, which it isn't as far I can tell - it's the result of a wider change in how the UK treats every online seller in the world.  See https://www.bbc.co.uk/news/business-55530721 

Chris
Click to expand...

Just been on DX website, Free shipping to UK
Where did you get this from?
Click to expand...
It says that at the top but when you try to add something to your cart - it say 'Can not delivery' the United Kingdom.

Just so that people are clear - the issue I'm talking about isn't specifically related to Brexit, it's a change in how import VAT will be collected from online retailers situated inside EU. and outside the EU.
 

Attachments

  • Screen Shot 2021-01-28 at 00.08.25.png
    Screen Shot 2021-01-28 at 00.08.25.png
    687.3 KB · Views: 159
C

cseal

Member
phizz4 said:
As I understand it, if the gift is worth less than/cost less than ?39 it is free of VAT and Import Duty. Over ?135 it attacts both VAT and Import Duty.
Click to expand...
The gift rules still apply - but that's when it's a gift from someone you know, not an online purchase
 
C

cseal

Member
mrodoc said:
Brexit was a stupid idea and not thought through. I have already had one bill to pay on what was actually a birthday gift.  I was used to pay import duty on stuff coming from the USA (where's that wonderful deal then) but now it's from Europe. Bang goes any kind of free market.
Click to expand...
It applies to US based online shops too - not Brexit related.  I'd okay with paying the import tax (if I wanted something enough) - but some US shops are now simply refusing to sell the UK as it means they have to register with HMRC, charge the tax and submit accounts to them several times per year
 
C

cseal

Member
nickwilliams said:
This is a Europe wide change, not a Brexit related UK thing. It will be a PITA to start with but actually most smaller companies selling on line use one of a number of bought-in shopping cart systems which will do the heavy lifting of the admin for them once the rules have been clarified a bit.

I expect Amazon will also deal with this for its Market Place vendors. e-Bay has a different relationship with its suppliers and their customers and may have more trouble intervening to make life easier for them.
Click to expand...

Thanks Nick.  You're right - I've been doing some more reading up. The rules come in to place for the EU on 1st July 2021.  The UK has adopted a similar system (but with fewer exemptions).  One other thing that's changed is there's no longer VAT waiver for packages worth less than ?15 (?22 in the EU).  From https://www.avalara.com/vatlive/en/vat-news/eu-2021-ending--22-import-exemption--import-oss-returns.html

The UK left the EU VAT regime on 31 December 2020. At the same time, the UK withdrew its EU ?15 low-value consignment stock relief threshold on this date ? from 1 January 2021. It introduced a new ?135 VAT-at-point-of sale regime, similar to the EU?s ?150 scheme. Non-EU sellers must charge UK customers 20% VAT, UK VAT register and the declare and pays the VAT charged to their UK customers. There is no Special Arrangements opt out as above.
Click to expand...
(above=EU).

I think it mainly disadvantages the smaller companies / one-person shops, specialists etc that won't have the time to invest in sorting out new processes for 1 country - until as you say perhaps the online cart systems adapt their solutions.

 
andrewmcleod

andrewmcleod

Well-known member
While strictly speaking it's not explicitly a result of Brexit, it's the inevitable consequence of introducing friction into such a large trading relationship. We couldn't have applied robust customs controls at the border to the volume of goods coming and going to the EU without massive VAT evasion or massive numbers of customs agents to process everything, so the UK has tried to introduce technological solutions to everything that put the burden on the seller, the importer, the courier, the haulage company - basically anyone except the Government.

The company I work for sells second-hand scientific equipment, which means we now have to try and work out the Country of Origin for everything as well as the HS Tariff code. You rarely get the same item twice, so it's a pain. Fortunately it's high-value, low volume stuff so the extra time spent per item isn't a nightmare, and the customers are generally happy to pay the import VAT at the EU end, but it's still a pain...

Friction.
 
P

phizz4

Member
cseal said:
phizz4 said:
As I understand it, if the gift is worth less than/cost less than ?39 it is free of VAT and Import Duty. Over ?135 it attacts both VAT and Import Duty.
Click to expand...
The gift rules still apply - but that's when it's a gift from someone you know, not an online purchase
I have seen several reports of people buying from retailers where the item isn't strictly a gift not having to pay below these prices. Norway operates a similar pricing structure on anything sent to the country, whether it is labelled as a gift or not, and whether you have paid for it or not (we often send items there as we have family working there). AFAIK you have always had to pay tax and import duty on items from the USA.
Click to expand...
 
royfellows

royfellows

Well-known member
cseal said:
Thanks Nick.  You're right - I've been doing some more reading up. The rules come in to place for the EU on 1st July 2021.  The UK has adopted a similar system (but with fewer exemptions).  One other thing that's changed is there's no longer VAT waiver for packages worth less than ?15 (?22 in the EU).  From https://www.avalara.com/vatlive/en/vat-news/eu-2021-ending--22-import-exemption--import-oss-returns.html
Click to expand...

Maybe our government and avalara need to get together?
https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

Note my link is "gov.uk"
 
F

Fjell

Well-known member
If it?s over ?135, then it?s the original system?

I have never seen a customs form for something off Ebay from China. Small value or not. I can understand the frustrations.
 
royfellows

royfellows

Well-known member
A bit more that might be helpful

Royal Mail operate a sting whereby the is a handling fee of ?8 in addition to whatever duties are payable for clearing imported goods. According to their website anything under ?135 is collected at point of sale

https://personal.help.royalmail.com/app/answers/detail/a_id/7208/related/1/session/L2F2LzEvdGltZS8xNjExODI2NDc0L2dlbi8xNjExODI2NDc0L3NpZC9mVWQ4MkYyNDlCN3hMbnp2NHRUS2tHU2owYmxyRU10UFI1MVNKUXJqWU9FYkZ6bTl5U1ZWQk1xU0lObG8lN0VPZEU3OEVxQUh5ZGhVWGp2VkxKb0ZLUFo3OXN0dkdLa2hpbkp4U2lQdFgyVUolN0U3ZEIwaHNMZGU1YUpBJTIxJTIx

I have only hit this once when I purchased a samurai sword from overseas. It was detained by customs as restricted goods or similar. I had to produce my martial arts public liability insurance and membership, and pay import duty and VAT. This was some time ago.
 
royfellows

royfellows

Well-known member
I deal with Fasttech HK for a lot of stuff, also kaidomain to a lesser degree. I will check stock and see if there is something I can re order and come back on it.

A lot of the HK sellers have UK warehouses, which explains the very fast delivery in some cases.
 
andrewmcleod

andrewmcleod

Well-known member
royfellows said:
Royal Mail operate a sting whereby the is a handling fee of ?8 in addition to whatever duties are payable for clearing imported goods. According to their website anything under ?135 is collected at point of sale
Click to expand...

It is possible to avoid this (apparently) by having your package marked that you (personally) will clear the item through customs, instead of Royal Mail clearing it through customs on your behalf (and paying the duty). By all accounts this is almost never easier, and will take considerably longer...
 
You must log in or register to reply here.
Top