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VAT and Import Duty.


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15 minutes ago, Stephen Chambers said:

 

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...

 

Thanks Stephen and Alex for pointing that out - it's a very important exception, and very relevant for small workshops.

 

That sale never happened so I've no dog in this fight, but to clarify confusion, this was certainly a large VAT registered business (who should have known better?..)

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I must say, in respect only of Ireland/ROI to the Uk, there is some distinctly confusing advice regarding "export" because of their "special relationship" with the North, wherein they seem to be sharing VAT status.

 

Read at face value, the implications of much of this text (link below) suggest's exports to the (rest of) the Uk DO require (RO)Irish VAT to be charged and Import VAT when arriving in the Uk.

https://intertradeireland.com/sales-growth/simple-guide-to-cross-border-trade/do-i-charge-irish-vat-must-i-register-for-uk-vat

 

That makes no sense and the fact that OMP's aren't even mentioned ( or the €150 limit ) suggests the information is questionable or outdated/pre Deal, to me. 

 

I hesitate to suggest that anyone read all of the next link.....but it seems to be the case that on ( or just before ) 01/01 the Uk generated swathes of accurate, if sometimes hasty and /or complicated, 'Post-Brexit' information.  At the same time much of Europe left the 'pre 01/01 information "live" which tries to cover No Deal and Deal, because no one was quite sure.  The link below seems to suggest it is one such.  

 

http://brexitlegal.ie/vat-on-goods-hard-brexit-scenario/

 

Reading this - at face value - not having regard for the fact that a deal was thrashed out, it too suggests a possible 'double VAT' hit.  Then you have to 'get past' the Business to Business interactions, ignoring the Hard Brexit/No Deal angle,  but eventually the pertinent section appears to be ...... 

Exports to UK

A zero rate of VAT applies to goods exported  from the European Union. This will apply to the sale of goods to the United Kingdom after Brexit. It must be proved that the goods have been dispatched directly out of the EU by the seller to a purchaser established outside the state.Evidence of supply must be available.

In the case of goods carried on the trader;s own vehicles the export notification message issued to the exporter for customs purposes is usually used. In the case of carriage by sea the bill of lading certificate of shipment or shipping advice notice is used proof. The certificate of posting may be used in the case of postal sales. In the case of goods exported by air, the air waybill or other equivalent information may be used

Import VAT and Brexit

Traders who are below the VAT registration threshold or are in a  VAT exempt business must pay import VAT and and may not reclaim it later. The procedures are the same as customs duty.

(Next irrelevant post Deal ?? In the absence of new arrangements with UK, imports from the UK by unregistered persons to private persons exempt businesses and sub-threshold businesses are subject to immediate payment of VAT in Ireland rather than payment of VAT in the place of supply in this case United Kingdom. Potentially the cause of Irish VAT charge confusion from the previous Website )

The supply from the UK would be exempt. The sale and dispatch out of the UK must be proved to reclaim UK VAT.

UK Perspective Post Brexit

Exports from Ireland to the UK  will  be subject to the zero rate of VAT in Ireland as exports. They will be subject to UK VAT as  imports.

Where UK businesses import goods from the EU the UK government proposes to introduce  postponed accounting for import VAT for VAT registered businesses in the UK. A guarantee is likely to be required.  In this case, businesses would be able to account for import VAT on their VAT return rather than payment at point of entry at the border. Customs declarations and payment of other duties may still be required where applicable. They may also be deferred under a guarantee.

When UK businesses export  goods to EU businesses they will continue to be zero rated.  EU sales lists will no longer be required in the absence of agreement for UK sales.U K businesses exporting to the EU must obtain evidence that the goods have left the UK in order to justify the zero rating of the supply for UK purposes. UK businesses will continue to be able to claim VAT refunds from EU states using the procedure for non-EU businesses.

Under current EU rules, goods entering the EU will be subject to VAT and  (and customs duties in some cases) in the EU country of import. In some cases VAT may be chargeable at the border. The particular position will be determined by the status of the buyer, the nature of the goods and the rules of the country concerned, which however have been largely harmonised.

Low Value Relief

The present low Value consignment relief will apply to goods entering the UK from the EU. In principle goods entering the UK sent by overseas businesses will be subject to VAT (where as in most cases, VAT is chargeable.

It is proposed in the case of parcels valued up to £135 that a technology-based solution will allow VAT to be collected from the overseas business seller. Overseas businesses will be expected to register with HMRC and account for VAT when due. A unique identifier will accompany parcel sent to the UK.

On goods worth more than £135 sent in parcels the UK will collect VAT from UK recipients in accordance with current procedures in respect of third country suppliers.

 

 

As per my previous, I see no "Unique Identifier" on any parcel/envelope I have received since 01/01 from the EU.

 

Given how difficult it is (was) to find reliable information in the Uk ( to whom the changes matter ) it is probably no surprise that in some instances 'some' in the EU, including ROI are having to wade through 'sketchy', 'mis' or outdated information and giving up! 

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  • 3 weeks later...
On 3/2/2021 at 3:19 PM, Sprunghub said:

I must say, in respect only of Ireland/ROI to the Uk, there is some distinctly confusing advice regarding "export" because of their "special relationship" with the North, wherein they seem to be sharing VAT status.

 

Here's a question I've just been trying to figure out: If a non-VAT-registered entity (e.g. a private seller or a small business with low turnover) located in Great Britain (England, Wales or Scotland) sells an item worth more than £135 to a private individual in Northern Ireland, will the buyer have to pay VAT?

 

Apparently the NI Protocol means that NI is effectively still part of the EU for VAT accounting purposes, even though the revenue generated goes to the UK government, so moving goods from GB to NI now counts as an export? 🤔

 

Frustratingly pretty much all the advice I can find assumes the seller is a VAT registered business.

Edited by alex_holden
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  • 2 weeks later...

I am back in contact with Donovan in South Africa and will probably be buying the D/A box from him.
https://www.concertina.net/forums/index.php?/topic/23598-wheatstone-40-button-anglo-for-sale/

Does anyone know whether I am likely to be charged VAT when it arrives in the UK? Does the fact that it was originally made in the UK make any difference?

 

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On 3/18/2021 at 9:34 AM, alex_holden said:

 

Here's a question I've just been trying to figure out: If a non-VAT-registered entity (e.g. a private seller or a small business with low turnover) located in Great Britain (England, Wales or Scotland) sells an item worth more than £135 to a private individual in Northern Ireland, will the buyer have to pay VAT?

 

Apparently the NI Protocol means that NI is effectively still part of the EU for VAT accounting purposes, even though the revenue generated goes to the UK government, so moving goods from GB to NI now counts as an export? 🤔

 

Frustratingly pretty much all the advice I can find assumes the seller is a VAT registered business.

 

This doesn’t really answer your question Alex, but it might be of interest to some like me on the other side of the great divide... I recently needed to buy a replacement motor for one of my machines, with the sort of spindle that is common in the UK and rather difficult to find elsewhere. Fortunately, I found a supplier in Northern Ireland and they were able to sell it to me as though I was buying it from any other EU country (I give them my VAT number and they deduct the VAT amount, which I tally in my next VAT return). The motor arrived a few days later not having passed by any customs official. It made me think I should find other NI wholesalers and tool suppliers for those difficult to find (typically imperial-sized) tools and sundries I need from time to time.

 

Adrian

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  • 2 weeks later...

Thanks for posting this news Stephen - just informed my accountant and the Dutch instrument makers' association. None of us has heard anything of this from our tax department! Looks like it's going to make things a lot easier if you sell a lot in one or two countries of the EU and more complicated for the rest of us!

 

Cheers,

 

Adrian

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"We are making life simpler and fairer for all."  Apparently it has been introduced to counter millions ( if not billions ) of Euro's worth of EU ( and no doubt Uk ) wide tax evasion via online sales.

The Uk introduced - supposedly - the process on 01/01, early, so as not to have to tweak the rules again 7 months after leaving the EU.

 

Having said that, I have received quite a few parcels from the EU in these first three months, all OMP purchases, mostly via Ebay FR/DE/IT.  None have had any indication on the packaging to indicate VAT paid at source, none have indicated OMP purchase, none have initiated  any VAT charge or 'handling' in GB Customs.  I have been fairly careful to keep the declared value under the £135/€150 value, on all bar one occasion it has been and I took the 'loss' risk on the one that wasn't ( it was only just over ).  The lack of interest as stuff is coming through Customs suggests they are either too busy to bother chasing the VAT for now or, until the EU start imposing the new OMP process, the Uk has only paid lip service to the supposed change?

 

Ebay is supposedly taking the VAT on behalf of Uk Gov for EU OMP purchases since 01.01 and some listing show a price and state "+20% VAT", but when payment is called for, there is no 20% 'hike', which I don't understand.  Whether it is because I am logged in via the DE, IT, FR page, in German/Italian/French, I don't know.

 

 

 

 

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On 3/31/2021 at 9:51 PM, Richard Mellish said:

I am back in contact with Donovan in South Africa and will probably be buying the D/A box from him.
https://www.concertina.net/forums/index.php?/topic/23598-wheatstone-40-button-anglo-for-sale/

Does anyone know whether I am likely to be charged VAT when it arrives in the UK? Does the fact that it was originally made in the UK make any difference?

 

It will make no odds that it was made in the Uk, and VAT will no doubt be charged given the value at a rate of 20%.  The "balance" in the process is to weigh the "valuation" against the known VAT charge and the risk of loss/damage in the value declared on the CN23.  ie.  do you want to take a 20% value "risk" ? on it getting here in one piece compared to what you agree as the purchase price / your personal moral view of the cost of Concertinas ( as opposed to what they are worth ) and how the tax system works ?   If you discount the purchase price to the value of 20% on the CN23, when you pay the VAT it will be a net '0' equation.  I think Ciaran suggested there may be a loophole for Antiques - which may be a whole new 'wormhole' to go down, but if it is a wormhole with 20% of some £k at the bottom it may be worth diving into! ......not that a 1950's one would qualify probably.

Edited by Sprunghub
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I've just had a phone call from DHL, wanting to know what the item is that is coming to me. I said "A concertina" and they said "What's that?", so I told them it's a musical instrument. They told me that it counts as "new goods" coming into the UK, and therefore subject to import charges, even though it was made here, because that was more than three years ago. That makes little sense, but "the law is an ass" as they say, and I knew I might have to pay so I'm not greatly bothered.

 

They're not asking for payment now but said I will either get a message some time before it's delivered or get an invoice in the post.

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Your situation is a little different to the "new" issue of importing from the EU into the Uk, because there are no "new" rules, as such, for importing from SA ( or the USA / Oz / Japan etc )  The rules are still "the rules" that they were before 01/01.  The "standard" International Form for Customs is a CN23 ( at that size/value ) but there is some info. to suggest that SA to UK uses a Form PP4, which may be the same in basic layout.

 

https://www.royalmail.com/sites/default/files/CN23.pdf  

 

Either way, it should come with a Customs Tariff Number and description of the item, so it's odd that DHL asking anything about what is in the parcel of the recipient ( rather than the sender ) whose duty it is to make the declarations.

 

Either way, the Charge would be on the value ( given it's value ) and to be expected?   

 

The 3 year "question" relates to a "Return of Goods" option....

 

https://www.gov.uk/guidance/pay-less-import-duty-and-vat-when-re-importing-goods-to-the-uk-and-eu#:~:text=You can get this relief,known as Returned Goods Relief.&text=The goods must also%3A,inward processing or end-use

 

so not one that would ever be available on a vintage instrument.

 

So, it all sort of makes sense.

 

 

 

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