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VAT and Import Duty.


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For a government document this one sets out the situation for importing to the UK relatively clearly Notice 143: a guide for international post users - GOV.UK (www.gov.uk).

 

For someone resident in the UK receiving a concertina from abroad worth over £135.  They will have to pay VAT at 20%, though if you have bought the item, many countries have schemes whereby you should not have to pay their local sales tax.  There may also be import duty due.  There are internationally used codes to identify items for the purposes of duty.  9205 90 10 Accordions and other similar instruments.  In this case the duty is 2%, Concertinas over 100 years old can be classed as 9706 00 00 Antiques of an age exceeding 100 years and they are free of duty.  One thing to watch is the VAT is not only charged on the value of the goods, but also on the duty, insurance  and postage and packing.  The only real change is these charges now apply to EU.

 

For people buying from the UK.  If the seller is VAT register there is a scheme where they can sell free of VAT Exports, sending goods abroad and charging VAT - GOV.UK (www.gov.uk)   The EU an USA treat antiques the same as the UK so there is no duty payable.  In the EU you will have to pay the local applicable VAT.  

 

You can look up commodity codes here The Online Trade Tariff: Look up commodity codes, import duty, VAT and controls - GOV.UK (trade-tariff.service.gov.uk)  you can also find the UK rate of duty.

 

You can also find the commodity codes and EU rates of duty here.  https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2020:361:FULL&from=EN     Note they us a comma instead of a decimal point in the % duty rate.

 

 

Edited by Paul Gleeson
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16 minutes ago, Paul Gleeson said:

There are internationally used codes to identify items for the purposes of duty.  9205 90 10 Accordions and other similar instruments.  In this case the duty is 3.7% (The same level of duty applies to EU countries). 

 

 

I think you will find the Uk Import Duty may now be 2%, not the EU level of 3.7%,

 

The commodity code for importing is 9205901000.

Goods are subject to Value added tax (20.00 %).

Importing from outside the UK is subject to a third country duty of 2.00 % unless subject to other measures.

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11 minutes ago, Sprunghub said:

I think you will find the Uk Import Duty may now be 2%, not the EU level of 3.7%,

 

The commodity code for importing is 9205901000.

Goods are subject to Value added tax (20.00 %).

Importing from outside the UK is subject to a third country duty of 2.00 % unless subject to other measures.

 

Thanks, I will alter post.

 

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Re. the question of submitting instruments for repair ( from a 3rd Country to the Uk ) and the tax / Duty issues, this may apply, https://www.gov.uk/guidance/apply-to-pay-less-duty-on-goods-you-import-for-specific-uses although it does not detail how tax issues are addressed.  It makes no sense that items submitted to a Uk repairer for return to the owner should have to have a 'purchase' tax / Import Duty paid if the item has no prospect of staying in the Uk, although obviously the work would.

 

 

I think the 'inventive' could probably manage the P/X process under the same regime were it to apply.

 

There is a Uk to 3rd Country "outward processing", which is almost certainly mirrored for 3rd Countries to the Uk, which also appears to be relevant, especially where guarantee's apply.

 

https://www.gov.uk/guidance/using-outward-processing-to-process-or-repair-your-goods 

 

This lifted from a UK University Site.....re OPR .....

Guidance on ... re-importing goods which have been returned for repair

If you have to return previously imported goods to a supplier outside the European Union (EU), you will need to take specific steps to make sure that you don't pay VAT and Import Duty again when the items are returned to you. The process for this is called Outward Processing Relief (OPR):

  1. When you return an item to the supplier, you must inform the exporting freight agent that the item is travelling under temporary export for repairs to be carried out, and following repair the item will be returned to the UK
  2. The exporting freight agent should then complete an OPR form on behalf of the University department, or give you instructions on how to complete the OPR application form yourself
  3. When the goods are re-imported the completed OPR form is used as proof that VAT and import duty were paid on the item when it was originally imported. This ensures that the cost of any VAT and duty is waived on re-importation
  4. If repaired goods are not returned in one single consignment, then the agent must be informed of this to enable them to inform HMRC who will note the quantity of goods being imported and the quantity which remain to be imported. (This paperwork must be presented to HMRC again when the next consignment is imported.)

What if I forget to make the OPR statement?

It is not possible to complete the OPR statement in retrospect. If it isn't completed when you send the goods for repair then HMRC will assume the export is final. When the goods are returned to you you would then have to pay the VAT and Import Duty again (ie twice).


What it the item can't be repaired?

If, after export, the supplier decides to replace the faulty goods instead of repairing them, then VAT and Import Duty will be charged on the full value of all new replacements.

 

 

 

 

 

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  • 2 weeks later...

I've finally located an official UK government document that explains the £135 VAT threshold change:

https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

 

What I take from this document (my interpretation, I am not a tax lawyer) is: If you are a business located outside the UK exporting an item worth less than £135 to a private individual located inside the UK, then you need to either do the transaction via an online marketplace (e.g. eBay, Amazon Marketplace, Etsy) that has the infrastructure to automatically handle all the tax stuff for you, or register for UK VAT and do all the admin yourself. My guess is that they are expecting most small businesses in this situation to go down the online marketplace route to avoid the overhead of VAT registration. Of course the online marketplaces all charge the seller a fee for the privilege of using their service.

 

If the item is worth £135 or more, the system works the way it used to. Theoretically this shouldn't affect sales between private individuals.

 

I think basically the same thing is going to happen for businesses exporting items worth less than €150 to the EU from the 1st July. (Something I haven't figured out: if you don't go down the OMP route, would you need to be individually VAT registered in every EU state you want to export to?).

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I ordered a concertina from the UK recently. I am in Germany. We pay 19% local VAT plus 3,2% customs for non-vintage (that would be older than 100 ys) instruments.

 

The 1.500 GBP instrument was 1.950 GBP in total for me. just a quick calculation example. that’s how things are now. I decided to deal with it. but you really start to think because it makes a dramatic difference.

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I've tried to read through so much of this stuff that it has fried my brains. I still think it is clear as mud. For example, if I were to take an instrument from the UK to the EU I may be liable to pay VAT on it in both directions, but not if a carnet was paid for and issued.

 

I cancelled an order from ROI a few weeks ago (not concertina related). I consulted with the retailer and they confirmed that, being above £135, I would have to pay VAT on its arrival to the tune of some £300 extra. Obviously that is a choice left to the buyer, but many of them are being taken by surprise.

 

Perhaps there is a way for businesses to claim VAT back on instruments they export OUT of the EU, but if so, this is not currently happening and is not reflected in the sales price.

 

1 hour ago, alex_holden said:

If the item is worth £135 or more, the system works the way it used to.

 

I am not sure if this is the case here. I may have misunderstood. Do you mean it works the way it used to for third countries, for the EU now?

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On 2/18/2021 at 3:23 AM, alex_holden said:

If you are a business located outside the UK exporting an item worth less than £135 to a private individual located inside the UK, then you need to either do the transaction via an online marketplace (e.g. eBay, Amazon Marketplace, Etsy) that has the infrastructure to automatically handle all the tax stuff for you, or register for UK VAT and do all the admin yourself.

This strikes me as insane.  What if every country in the world imposes this kind of system (and you say that the EU is about to do so) then every small online business would have to register with every country that they might want to sell stuff too, collect their taxes for them and keep detailed records.

 

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48 minutes ago, Don Taylor said:

This strikes me as insane.  What if every country in the world imposes this kind of system (and you say that the EU is about to do so) then every small online business would have to register with every country that they might want to sell stuff too, collect their taxes for them and keep detailed records.

 

 

Or switch to selling via one of the big online marketplaces like eBay that does it for them.

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  • 2 weeks later...
On 2/18/2021 at 10:14 AM, Skandor said:

I ordered a concertina from the UK recently. I am in Germany. We pay 19% local VAT plus 3,2% customs for non-vintage (that would be older than 100 ys) instruments.

 

The 1.500 GBP instrument was 1.950 GBP in total for me. just a quick calculation example. that’s how things are now. I decided to deal with it. but you really start to think because it makes a dramatic difference.

Yes it is a pain...21% local VAT here in Belgium. I hope for more concertina manufacturer like 7mount in EU...

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1 hour ago, papawemba said:

 I hope for more concertina manufacturer like 7mount in EU...

 

It would definitely fill a gap, since 7mount is currently taking no new orders due to high demand. 
Another crafter in Germany would be Jürgen Suttner, http://suttnerconcertinas.com , but just like Ralf from 7mount he's focussed on Anglos and a little amount of ECs, no duets here. But fine instruments, both. 

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On 2/18/2021 at 9:53 AM, JimmyG said:

 

 

I cancelled an order from ROI a few weeks ago (not concertina related). I consulted with the retailer and they confirmed that, being above £135, I would have to pay VAT on its arrival to the tune of some £300 extra. Obviously that is a choice left to the buyer, but many of them are being taken by surprise.

 

 

I am sorry but this makes no sense.  An order  for Goods from ROI/EU meriting a £300 VAT charge on entry to the Uk should have been Zero rated in ROI for sale to an Non EU country.  You only pay VAT once, you don't get charged VAT as an  EU duty then again as Uk duty.  There should be no built in "extra" to that degree ?

 

Yes there may be a small 'extra' VAT charge on the carriage costs and a small handling charge and carriage costs have gone up - €10 on a typical €25 parcel pre Brexit ( from Germany ), ie. now around €34.  

 

Without knowing the specifics it is difficult to be precise, but, the bottom line is that if +/- £300 'extra', if a VAT charge is due on arrival in the Uk, then the price of the Goods supplied by the Irish company should have been Zero rated, ie. no VAT charged at source, discounted to that same VAT value at point of sale from the list price "inc of VAT".

 

Evidence is that many EU companies have not been given much insight into how to address post 01/01 sales to the Uk.  Some have started refusing to sell to the Uk re the VAT issues even under the £150 Euro limit, but it appears they could still sell, and Buyers could still pay the VAT on entry into the Uk, as we do with some non OMP purchases from the State's. 

 

Truth is......I suspect most, if not all, would slip through anyway currently as there has been nothing on several parcels I have received from France and Germany, since 01/01, to suggest "Duty Paid" or "Duty Due", nothing to indicate OMP purchase, either, although they have been. 

 

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13 hours ago, Sprunghub said:

should have been Zero rated in ROI for sale to an Non EU country

Yes, this is what I thought too. It wasn't, though.

 

As the point of sale cost was the same for me, as it was for someone in ROI, I didn't think arguing the case with them would help me out. 

 

From the exchange:

-------------------

... I am worried that I might be be asked to pay a large customs duties or import VAT upon delivery, but I have found confusing and conflicting information and there is no incindication or mention of VAT on your website. Do you guys have any knowledge of this, or whether this might be the case? ... If there is a risk that this will happen, I will have to cancel my order before it is shipped...

------------------

Thank you for your order and for getting in touch with us about this. Unfortunately due to Brexit you will have to pay import tax and VAT on the package when it goes through customs. If this does not work for you please let me know and soon as possible so I can have your order cancelled.

-------------------

 

So, the case is, they ought to be selling things due for export outside the EU WITHOUT charging EU VAT. That's exactly what I had thought in the first place. The indication they give however, is that before Brexit, that VAT would have been settled already in ROI, but is being settled again. I wonder if they're trying to pocket the difference, or just stupid?

 

What you've said makes complete sense to me, and I agree that this reflects most of the legislation. Unfortunately it doesn't match up with what I've heard or seen happening.

 

13 hours ago, Sprunghub said:

I am sorry

 

Please don't be sorry, it didn't make any sense to me either! I've tried to get my head around it all since my initial post and have come to the same conclusions. Your reply has been very useful. 

 

Jimmy

Edited by JimmyG
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17 hours ago, papawemba said:

Yes it is a pain...21% local VAT here in Belgium.

 

So, a UK made instrument should be offered to the EU sans local VAT? Makes sense. In this case the purchase price for the buyer would be lower than for a British one, and there would be little material difference in the end cost once Belgian VAT was paid. So why is everyone annoyed about it? 😜

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24 minutes ago, JimmyG said:

As the point of sale cost was the same for me, as it was for someone in ROI, I didn't think arguing the case with them would help me out. 

 

...

 

So, the case is, they ought to be selling things due for export outside the EU WITHOUT charging EU VAT. That's exactly what I had thought in the first place. The indication they give however, is that before Brexit, that VAT would have been settled already in ROI, but is being settled again. I wonder if they're trying to pocket the difference, or just stupid?

 

There is an exception: if a seller is not VAT registered, they can sell VAT-free as long as it doesn't cross the UK/EU border. That's the situation I am in. My turnover is low enough that I'm not required to register to collect VAT, and the nature of my business is such that it wouldn't make much financial sense to do so. That means my UK customers don't have to pay VAT, but since Brexit my EU customers now have to pay VAT at their local rate on import.

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34 minutes ago, JimmyG said:

So, a UK made instrument should be offered to the EU sans local VAT? 

 

But, if you're dealing with a small business with a low turnover, the seller may be below the VAT threshold - so not need to be registered for VAT at all. In which case there would be zero VAT to be deducted...

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