Budget 2016 - overseas purchases, VAT implications

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Meeten

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Looks like there is increasing pressure to ensure that VAT is paid from overseas purchases


Tackling VAT evasion by overseas sellers


1.218 The government is taking firm action to protect the UK market from unfair online competition. Some overseas traders from beyond the EU avoid paying UK VAT, undercutting online and high street retailers and abusing the trust of UK consumers who purchase goods via online marketplaces.

1.219 Budget 2016 announces action that will help to protect consumers and level the playing field for businesses. HMRC will be able to require non-compliant overseas traders to appoint a tax representative in the UK, and will be able to inform online marketplaces of the traders who have not complied. If traders continue to evade VAT and no action is taken to prevent the fraud, then online marketplaces can be made liable for the VAT.

1.220 The government will also introduce a due diligence scheme for the fulfilment houses where overseas traders store their goods in the UK. This will make it harder for VAT evading firms to trade. While the government continues to take action domestically, the global nature of the fraud means international action is also required. The UK has already raised this issue with EU and international partners and the EU and OECD’s current work programmes include further work to help combat this fraud.


Page 61 if this wonderful document
 
Rather than go for the likes of businesses or customers that may or may not circumvent a small amount of VAT, perhaps they could go after the huge corporations failing to pay anything near (millions, if not billions of £) the amount they should?!
 
I don't think its an insignificant amount of Tax thats being avoided by the grey market companies, its import duty as well as VAT so on a £1000 camera or lens thats £240 plus, now how many sales of that value do these companies make each week? it soon adds up and its not just that, its literally killing our high street camera shops, they just can't compete and devaluing the second hand market as people expect second hand goods to undercut grey market imports by a significant margin and thats hardly fair on joe bloggs who's done things legit and bought a UK item then even in few months decides to sell and finds he's lucky to recoup even 50% of his initial outlay in a private sale.

I know some who swear by HDEW, Digital Rev & Panamoz etc, but I won't use them, I think theres an intrinsic value in having a full UK warranty, a face at my local camera shop I know and can rely on and a UK supplier who won't abandon me.

Yes theres been a lot of big corporations avoiding tax and that needs sorting out, but so does this issue, its killed many smaller family shops already but even a few big guns such as Jessops & Jacobs bit the dust as well.. thats for many of us our local camera shop, our local hub of information & also local jobs going out the window just to save a few quid.
 
odd jim said:
This is interesting, HMRC having a "cosy" relationship with tax avoidance accountants;

http://www.ibtimes.co.uk/tax-avoidance-uk-hmrc-pac-461566

With a tax deficit of £5bn thanks to big companies avoiding tax, why are they going after the little people?!
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What little people? Some of the Chinese sellers on eBay and Amazon are huge companies that sell hundreds of thousand of pounds worth of good into the UK every month. Digital Rev being one of them.

At the moment it looks like they are only targeting eBay and Amazon sellers and will hold the market place accountable if it's not controlled.

I just bought a roll of Stihl strimmer line on Amazon. I didn't even think twice as to where is was coming from. Only when I got the confirmation email and saw expected delivery was two weeks did I realise it's probably coming from China or similar. I bet no VAT will be paid to HMRC.
 
ecoleman said:
What little people? Some of the Chinese sellers on eBay and Amazon are huge companies that sell hundreds of thousand of pounds worth of good into the UK every month. Digital Rev being one of them.

At the moment it looks like they are only targeting eBay and Amazon sellers and will hold the market place accountable if it's not controlled.

I just bought a roll of Stihl strimmer line on Amazon. I didn't even think twice as to where is was coming from. Only when I got the confirmation email and saw expected delivery was two weeks did I realise it's probably coming from China or similar. I bet no VAT will be paid to HMRC.
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Ok, they're little compared to Google, Apple, AOL, Barclays, McDonalds, Starbucks etc, to name just a few, all massive UK tax avoiders.

Compared to them they're tiny and utterly insignificant. "Little people" was used as a coined phrase of course.
 
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I reckon it's more about ensuring a level playing field for UK business, the upshot is that everything will get more expensive AND/OR it will be controlled by the big players who are being strongarmed into paying more tax. More of a strategic play than just collecting taxes from overseas.

And being a Tory government who's side do you think they're on ;)
 
ecoleman said:
What little people? Some of the Chinese sellers on eBay and Amazon are huge companies that sell hundreds of thousand of pounds worth of good into the UK every month. Digital Rev being one of them.

At the moment it looks like they are only targeting eBay and Amazon sellers and will hold the market place accountable if it's not controlled.

I just bought a roll of Stihl strimmer line on Amazon. I didn't even think twice as to where is was coming from. Only when I got the confirmation email and saw expected delivery was two weeks did I realise it's probably coming from China or similar. I bet no VAT will be paid to HMRC.
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I don't think you'd pay vat on £16 anyway, but I get your point.

I always thought places like digital rev, Hdew paid the vat and import duty, is this not correct?
 
Nawty said:
No one knows for sure but on the balance of evidence, no.
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My last purchase from them had a sticker on declaring the import duty paid. Can't recall how much it was.
 
odd jim said:
With a tax deficit of £5bn thanks to big companies avoiding tax, why are they going after the little people?!
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Because the "little people" are easier and cheaper to go after and each one that is successful adds to the "clear up" rate so making the statistics look good.
 
Meeten said:
VAT?
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Can't remember which duties it referred to, I assume looking back it was import duty though it did state on the package its value so possibly? In fact it's contents, package value and country of origin was clearly marked in that sticker, so if they missed anything on it, more fool them :)

Either way, the VAT on that and many similar packages is nothing compared to how much tax Barclays or Google failed pay that month.

Edit - as below, DR state they pay VAT.
 
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odd jim said:
My last purchase from them had a sticker on declaring the import duty paid. Can't recall how much it was.
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I'm pretty sure my HDEW purchase had an invoice saying duty had been paid.

Edit: I've just checked my invoice, it does have 20% VAT paid and HDEW had a VAT number listed on there too.
So yes, they pay the VAT.

HDEW are different to Digital Rev in that they are UK based and import to their UK offices before shipping out to you. Digital Rev ship directly to you from Hong Kong.
 
ABTog said:
I'm pretty sure my HDEW purchase had an invoice saying duty had been paid.

Edit: I've just checked my invoice, it does have 20% VAT paid and HDEW had a VAT number listed on there too.
So yes, they pay the VAT.

HDEW are different to Digital Rev in that they are UK based and import to their UK offices before shipping out to you. Digital Rev ship directly to you from Hong Kong.
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A post from DigitalRev in answer to a question to this in the Digital rev thread states they pay VAT.
 
I'm not saying DR don't pay the right value (as one of the bigger players you'd hope they do), but a common thing for grey importers generally is to say they pay the vat, but to misdeclare the value of the contents so that the vat bill is lower than it really ought to be

another common one is to say they'll pay any vat you are charged , implying that not every parcel will be intercepted but they'll pay or refund those that are
 
jakeblu said:
I don't think you'd pay vat on £16 anyway, but I get your point.

I always thought places like digital rev, Hdew paid the vat and import duty, is this not correct?
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I probably wouldn't pay VAT on it when I receive it no. But the company selling it, if they are turning over a certain amount in the UK are legally required to register for VAT here, collect VAT and pay it over to the HMRC. Now I don't know what volume this company does (whoever they are), but you can be sure Digital Rev exceeds that volume for VAT registration as do many many other overseas business selling via these two marketplaces.
 
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ecoleman said:
I probably wouldn't pay VAT on it when I receive it no. But the company selling it, if they are turning over a certain amount in the UK are legally required to register for VAT here, collect VAT and pay it over to the HMRC. Now I don't know what volume this company does (whoever they are), but you can be sure Digital Rev exceeds that volume for VAT registration as do many many other overseas business selling via these two marketplaces.
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but are they turning that over in the uk ? - thats the crux of the matter , most grey importers live in the amorphous land called internet... if a buyer buys from a foreign company then often that company will say that the buyeris the importer and thus they should be dealing with the vat etc and the compny is not required to register for it because they are paying the sales tax if any in the country where they are based

currently that is legal - these measures appear to be going to change that
 
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ecoleman said:
I probably wouldn't pay VAT on it when I receive it no. But the company selling it, if they are turning over a certain amount in the UK are legally required to register for VAT here, collect VAT and pay it over to the HMRC. Now I don't know what volume this company does (whoever they are), but you can be sure Digital Rev exceeds that volume for VAT registration as do many many other overseas business selling via these two marketplaces.
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The amount is well below both import VAT and import duty threshold, so wouldn't be charged anyway.
 
I think the threshold for LVCR is £18 (ETA just checked £18 for vat, £135 for duty) - but i also thought osbournewanted to change that in this budget like he did the channel islands loophole in 2012
 
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big soft moose said:
I think the threshold for LVCR is £18 - but i also thought osbournewanted to change that in this budget like he did the channel islands loophole in 2012
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I don't think import duty is payable as long as the entire package doesn't exceed £135 and VAT is not charged if it's less than £15.

Although the package we are referring to is £16 so £1 over the VAT-able rate it still wouldn't be charged as the VAT is less than £9 (any VAT less than £9 isn't charged).
 
odd jim said:
I don't think import duty is payable as long as the entire package doesn't exceed £135 and VAT is not charged if it's less than £15.

Although the package we are referring to is £16 so £1 over the VAT-able rate it still wouldn't be charged as the VAT is less than £9 (any VAT less than £9 isn't charged).
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according to hmrc its 18 so the packagewould have been under anyway

however we are talking about different things - you and I are talking about LVCR exemptions on import Vat - Ecole man was saying that the supplier ought to be vat registerdd in the uk and thus collect vat on the sale of any vatable product
 
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HDEW supplied me with a VAT invoice .. so I don't think that you should mention them in the same breath as some others unless "you" are really sure
 
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BillN_33 said:
HDEW supplied me with a VAT invoice .. so I don't think that you should mention them in the same breath as some others
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Was that a vat invoice for vat charged on the purchase , or proof that Vat was paid on import ? (I'm not saying they don't just that i'm curious as one doesnt necesarily mean the other)
 
big soft moose said:
Was that a vat invoice for vat charged on the purchase , or proof that Vat was paid on import ? (I'm not saying they don't just that i'm curious as one doesnt necesarily mean the other)
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no it was VAT calculated correctly on the full purchase price I paid, i.e. at 20% ....... I'll have another look ...... but I asked them for a VAT before purchase and they supplied one

looking at the invoice now

pre Vat price £1,174.17
VAT at 20% £234.83
Total £1409.00

with VAT number

maybe it was UK sourced

Nikon 300mm f4 PF
 
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A thought - if you buy from an importer, does the importer not pay the host countries equivalent of VAT anyway?

Slightly OT but related. - I'm going to NY in Nov and I'll be going to B&H photo. No doubt I'll make a purchase :) Of course, it'll be declared on arrival back to the UK for import duty and even though I'll pay sales tax in the US, will I have to pay VAT in the UK too? That doesn't seem fair?
 
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odd jim said:
A thought - if you buy from an importer, does the importer not pay the host countries equivalent of VAT anyway?

Slightly OT but related. - I'm going to NY in Nov and I'll be going to B&H photo. No doubt I'll make a purchase :) Of course, it'll be declared on arrival back to the UK for import duty and even though I'll pay sales tax in the US, will I have to pay VAT in the UK too? That doesn't seem fair?
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In theory yes , but the host countries equivalent if any is generally a lot lower ... also unlike you as man in the street they can set their sales tax liabilities against their sales tax collected (like a uk dealer sets his vat paid against his vat owed)

btw we shouldnt really use the term importer except with refference to HDew or maybe kerso , as in most cases the grey dealer isnt the importer at all - the customer is
 
BillN_33 said:
no it was VAT calculated correctly on the full purchase price I paid, i.e. at 20% ....... I'll have another look ...... but I asked them for a VAT before purchase and they supplied one

looking at the invoice now

pre Vat price £1,174.17
VAT at 20% £234.83
Total £1409.00

with VAT number

maybe it was UK sourced

Nikon 300mm f4 PF
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so they are definitely Vat registerd in the uk ... its not proof though that correct vat was paid on import (assuming the item was imported), I'm not saying that hdew are not paying it on import , but so far i havent had any grey importer reply positively t enquiries as to whether they can provide evidence that full and correct import taxes are paid ... which is a shame because i'fd be happy to use one that did.
 
big soft moose said:
In theory yes , but the host countries equivalent if any is generally a lot lower ... also unlike you as man in the street they can set their sales tax liabilities against their sales tax collected (like a uk dealer sets his vat paid against his vat owed)

btw we shouldnt really use the term importer except with refference to HDew or maybe kerso , as in most cases the grey dealer isnt the importer at all - the customer is
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True. Hmmm. I need to do some maths if I buy anything over there then, was planning on getting a 24mm prime!
 
BillN_33 said:
no it was VAT calculated correctly on the full purchase price I paid, i.e. at 20% ....... I'll have another look ...... but I asked them for a VAT before purchase and they supplied one

looking at the invoice now

pre Vat price £1,174.17
VAT at 20% £234.83
Total £1409.00

with VAT number

maybe it was UK sourced

Nikon 300mm f4 PF
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That's how my HDEW invoice looked, purchase price, VAT at 20% and total.

I know someone who bought a camera from a Hong Kong based web retailer (I forget which, possibly DR) and their camera got stuck at customs at Heathrow because apparently the customs guys were stopping every package with that retailers logo on and then checking the documents. The guy never got the camera, but did get a refund, then ordered from HDEW.
 
big soft moose said:
any grey importer reply positively t enquiries as to whether they can provide evidence that full and correct import taxes are paid ... which is a shame because i'fd be happy to use one that did.
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Which would most likely diminish the reason you would use them, the lower price. So it is unlikely that you would use them....
 
big soft moose said:
so they are definitely Vat registerd in the uk ... its not proof though that correct vat was paid on import (assuming the item was imported), I'm not saying that hdew are not paying it on import , but so far i havent had any grey importer reply positively t enquiries as to whether they can provide evidence that full and correct import taxes are paid ... which is a shame because i'fd be happy to use one that did.
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if they provide a VAT invoice why would you want to question them - do you question every purchase that you buy, i.e. a cooker or TV

the government will never be successful at stopping what is "happening" - once goods have entered the EU they can be moved around freely - the UK cannot police the EU and goods from the EU can pass into the UK freely - look on Ebay.de - you will find that some goods are shipped to Germany from HK - and then onto the UK

close one loophole down and another springs up

All this grey, VAT, no VAT etc., has been totally over discussed - everyone should know that if you buy something off EBay and someone on line that you cannot really verify you are taking a chance - risk versus reward - and we all like a "bargain"
 
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jerry12953 said:
I heard this on the radio and took it to mean grey importers too.

When (and if) it comes into operation there will be a whole range of retailers all charging the same price for the same item. You only have to look at Camerapricebusters to see how the market works for camera equipment.!

See link below....

http://www.camerapricebuster.co.uk/Canon/Canon-Digital-SLRs/Canon-EOS-5D-Mark-III-Body
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I agree - we are supposed to have an "open market" - but Nikon, Canon etc., still seem to be controlling the UK Retail price, (which would be illegal if they were!)
 
Meeten said:
Which would most likely diminish the reason you would use them, the lower price. So it is unlikely that you would use them....
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It depends on the item - when a camera body that is $999 in the states is £999 here (which tends to happen arround launches) it would still be cheaper to buy it from the states and pay the import vat

$999 is £691 at current rates of exchange , so the vat is £138.20 , making the whole vat paid price £829.20 - thats still a saving of £169.80 - i'd be up for that
 
big soft moose said:
It depends on the item - when a camera body that is $999 in the states is £999 here (which tends to happen arround launches) it would still be cheaper to buy it from the states and pay the import vat

$999 is £691 at current rates of exchange , so the vat is £138.20 , making the whole vat paid price £829.20 - thats still a saving of £169.80 - i'd be up for that
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At launch yes, on some cases. Later on the difference is marginalised and then you have to place a value on the warranty. Which the likes of hdew offer...
 
BillN_33 said:
if they provide a VAT invoice why would you want to question them - do you question every purchase that you buy, i.e. a cooker or TV
"
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i don't buy cookers or tvs from grey importers - if i did then i'd want the same standard of proof

If you buy from a white dealer you know its been imported legally (because its come through main dealer channels) - the point being that with a grey importer you don't have that assurance, and a vat receipt only demonstrates that they've charged you vat on the sale- not that they paid the import vat

Flip it round - if they are importing fully legally and paying the correct vat etc on import , why wouldnt they be happy to provide proof of it ? given that that can only work to their advatage in a market packed with people who don't
 
Meeten said:
At launch yes, on some cases. Later on the difference is marginalised and then you have to place a value on the warranty. Which the likes of hdew offer...
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you're missing the point - they say they are importing legally and paying all the vat etc ... if they can actually prove thats the case then their prices shouldnt change at all (the argument being that they have a better source of supply and can thus offer keen prices despite paying the vat ... if thats true then fantastic, and if they can prove its true i'd be happy to use them.
 
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