Forum Moderators: buckworks
Any advice is greatly appreciated.
Pete
Best way is to stop your Government from setting up trade barriers into the US. That we can talk about free trade.
What do you expect? Tax all imports but let your goods come in to the UK without paying a tax that we all have to pay internally anyway?
Sorry - probably a bit too political for WebmasterWorld!
So I take it all interent purchases are taxed in the UK?
I'm not charging the VAT. We ship the items to the UK and they get held at the point of entry until the VAT is paid. Is this happening because we are insuring them? So the VAT gets applied based on the insured amount? If we didn't insure item would no VAT be charged?
Physical goods, apparel to be as specific as it gets around here.
VAT is a "consumer tax". It is not raised from the seller, but from the buyer (although the seller has to do the raising for domestic shipments). The fact that your customers have to pay VAT for imported goods does not disadvantage you. To the contrary, it eliminates the unfair cost advantage you would otherwise have over domestic merchants.
There's only one way to avoid VAT. If your customers buy your goods for business purposes, they will later get it refunded later by their tax authorities. Of course, they will in turn have to raise VAT from their domestic customers for the goods and services they produce with the help of yours.
I import large amounts of products from the USA for sale in the UK. I am registered for VAT in the UK, so can reclaim the import VAT, but still have to charge it when i sell it on to the final customer.
When the goods arrive in the UK, customs and excise work out the import duty (this duty variable depending on what is being imported eg: my goods attract 2.5% import duty)
The goods, shipping and duty prices are added together and then VAT charged on that price.
It might be worth pointing out on your website that UK customers may be subject to local import taxes.
Check out the HM Customs and Excise website for further info about import duty and VAT.
UK: A supplier in the UK sells something for £100 and charges the customer £117.50 (inc VAT)
US: A supplier from the US sells something for £100 and expects to be VAT exempt and charges £100
Now ask yourself, is adding the 17.5% to the second example a disadvantage, or does it make it a level playing field?
>>> Does anyone know of a way around the UK VAT shipping from the US?
Yes, but it involves a hefty fine, debt collection services, baliffs removing goods from your house (no search warrant required - UK Customs and Excise have more power than the police in this regard) and possibly a prison sentance. I wouldn't recommend messing with UK (or US) tax!
Mungo, thanks for the heads up on the HM site. I'm just going to link to the "shopping on the internet section" from one of my checkout pages. If anyone else interested this is it:
[hmce.gov.uk...]
A few points:
1: anything less than £18 is exempt.
2: In addition to the vat there is a customs duty whose rate varies based on the country of origen.
as far as i remember it, some hygiene products are set at 5% VAT, so there may be a few examples where the full 17.5% is not the case.
I don't know about Spain but within the UK books are zero-rated (ie 0% VAT), so that is maybe why you weren't hit with an extra VAT bill when you shopped at Amazon.
I think you just need to make your UK customers *aware* of their VAT responsibilities (as ultimately it is their responsibility, not yours) when they are ordering from you.
as far as i remember it, some hygiene products are set at 5% VAT, so there may be a few examples where the full 17.5% is not the case
Yup. For example you don't have to pay VAT on books or childrens clothes.
If you want to get political, please explain why an American citizen should assist any other country in collecting taxes to support their bloated welfare state societies?
As for getting around the VAT, try listing your items as gifts on the customs forms. You also may want to underestimate the value of the goods. Every country has a minimum limit before VAT kicks in, so find out what that limit is. Also, try to package your shipments in plain boxes with no company info that will give away that the package is from a business. Hope that helps.
And can you explain why an American citizen can sell something to a UK citizen cheaper than a UK citizen? That's why the law changed. And Customs and Excise in the UK are much harsher than many other countries. They do check a lot of packages. If you want to lose 5% of parcels, with no compensation and you are a regular offender, they will take international legal action.
I think you are encouraging someone to take part in an illegal activity with your suggestions, probably against the TOS of these boards.
It probably won't be long before the US is charging the EU for 'Sales Tax', and who will get the most money (tax-wise) then? I imagine the US. The faster that your country implements the same law, the better for you and the worse for each country in the EU.
As far as what is fair is concerned, I'm a capitalist, so fairness is not my concern. Business is competition and we are all out to make the most profit possible, have the most customers, etc... If being fair means going out of business, then I am sorry but I will never be fair. Fairness will not put my kids thru school or put food on the table.
Furthermore, I checked the TOS and as far as I am aware, I have not violated it. If I have, then I will gladly edit my post to comply.
Had the same problem myself before when I got stung for £60 without any notice from US retailer. Not a happy bunny....
J
If you are sending high value goods to the UK using companies like FedEx or BAX Global then there is no way round the UK VAT and duty.
However, if you use the US Postal Service to send low value items then it has a better chance of getting through without any duty or VAT applied.
I have had a number of items sent to me from the USA using USPS and these items have not been checked by customs and i haven't had to pay any VAT on them. (The goods & shipping value had been around US$100)
BUT: On other occasions I have had the exact same US$100 dollar shipment checked by customs and they have charged me VAT and duty.
When sending low value items by USPS it all depends on whether your parcel is selected to be checked by UK customs.
If you send it using USPS, then its usually the Royal Mail or Parcelforce that will deliver it in the UK.
Thank God for government employees....
Just remember to include a verse about shipping and duties being the responsibility of the buyer ....Yadda Yadda Yadda
Are you telling me that there is no tax added to goods that you buy in the USA?
If not, what is sales tax?
And lastly, once VAT has been added to an item it is illegal to take it off. So, if the UK government decided to add VAT to children's clothes, it can never be reduced back to 0%.
It's your option to import into the UK and your decision (and other EU countries too). The law has changed to make it fair between US companies and UK companies.
It is not only you that has to suffer, we have to charge various rates depending on where we ship goods. Some countries have 25% VAT and we have to add 25% instead of 17.5%. Those customers will be upset too.
If you apply for a UK VAT number through customs and excise (I am not sure if you need a UK base or not), then you can claim the tax back on the business purchases you make from the UK or other EU countries too.
Customs and Excise are very strict on the number of parcels that they check. And they will bill your customers for all those parcels found to be avoiding VAT. They will take international legal procedures. As I stated in a previous post, they have more power than the Police, Special Forces or even MI5 or MI6 (our Security Services). That is an organisation with more power (in some areas) than your equivalents: NSA, CIA, FBI etc...
It's entirely up to you, but it's called a level playing field. This country is not happy about imports putting our own companies out of business. With prices being so low in the US anyway, you should still be able to undercut UK companies even with the VAT added on. If you can't, then your prices are too high (cost prices) and you should look around for alternative suppliers, if it is a product that you can.
Maybe Mungo can answer this one: You said that your parcels were checked and you sometimes had to pay VAT and duty. Did you have to pay any fines to customs or did they simply release the goods on the payment of VAT?
And EU customers should be made aware of the facts, if you want to have repeat business. Delays (from customs), extra cost (maybe unexpected to the customer) will stop the customers ordering again from you, if you haven't sent things correctly in the first place.
It's your choice, but can you afford to resend 10% of goods again? And then 1 in 10 of the replacements get caught up again, can you afford to send 1% of orders, three times? Or will you volunteer to pay the tax for them?
It will happen, they will get some caught out and then you need to know what you are going to do about it.
On other occasions, i haven't had to pay anything to them, and have had no fines or comeback of any kind. Customs decide if they want to check the parcels or not.
But as i said before, if you send high value items using FedEx or a similar shipper, you will have to pay VAT and duties.
Mark it as a gift
This is seriously illegal if it's not a gift (which it certainly isn't if it has been purchased!)
I can't understand all this VAT stuff - I have to get my accountant to work it all out for me. And when he sends me his bill, there's VAT added to it as it is a taxable service.
So us poor Brits even pay VAT on getting our VAT calculated!
I actually happen to live right next to a state that does not charge sales tax and I can tell you that I regularly make the trip across the state line to avoid paying the tax. I'm not the only one either! Most people want to avoid a tax if at all possible, so why shouldn't I try to help them? isn't that a part of good customer service? I'm not the police, so I will leave the enforcement up to them.
It seems to me that avoiding the VAT is a win win situation for everone, because most likely VAT won't get charged, and if they do inspect the package, then the customer will just have to pay VAT.
Also, on this whole subject of legality, I don't believe the UK or any other country has the authority to impose laws on people who do not reside in that country. Therefore, if I avoid the VAT, what law have I broken?
It seems that some of you are seriously offended that you have to pay VAT and taxes. Taxes and VAT are part of being in a civilized world. They are used to finance health care, education, welfare, libraries and a million other things that you use every day. You are only aiding higher taxes and VAT if you cheat and don't pay it because more money will have to be spent on checking whether people are cheating or not.
We may complain from time to time about taxes and VAT, but it should not get to the point where we work at avoiding it to the extent that we become criminals.
USA customers don't pay VAT if they buy something online from the UK and have it shipped to the USA. You would just pay the price excluding the VAT.
If i sell something online to any customer outside of the EU, i do not have to charge VAT to that customer.
If a business in the USA or any non-EU country sells a product to a UK customer and then ships it to the UK, then VAT and duty will be payable by the customer (not the sender) on arrival in the UK as it is classed as an import.
Once the package arrives in the UK, customs will decide what to do with it. It can go down a number of different routes. A few of these routes my shipments have gone down are listed below
1: Pass straight through UK customs (low value shipments)
2: UK Customs wants to inspect the paperwork to make sure everything is correct and then charge duty & VAT
3: UK Customs wants to inspect the paperwork and goods to make sure that what is stated on the paperwork is what is actually in the boxes. (then charge duty & VAT)
The declaration of the goods to UK customs is taken care of by the shipping company (FedEx, BAX Global etc)
You have a simple choice. The customers pay the VAT or you stop shipping to the EU. After all, it is the customers that pay the VAT, not you. So the UK customer pays the tax, the UK government gets the tax. You don't have to collect the tax according to previous posts, it appears that the couriers do this for you.
If the customers are complaining, then you are missing some information on your website. Why don't you simply put a comment that EU customers are liable to pay VAT at their local current rate on delivery. Simple really.
And you complain about our country scrapping VAT and yet your own state charges! Why complain about us if your country is doing the same thing? What kind of a country charges different rates in different areas? Only the USA would do this. But I would do the same as you: shop where it is cheapest, as long as it is not illegal.
You may think our laws are stupid, but on the other hand, some of your laws are stupid too! We may not agree with the laws of each others countries, we may not agree with the laws in our own countries (there are some UK laws I don't like), but the laws are there for a reason and need to be obeyed. In some ways, I don't agree with the law either, but it has to be obeyed. I obeyed it in one simple move: refuse to ship outside the UK. Because of odd tax laws, I don't supply the US, for example.
But, at the end of the day, it is UK tax, collected by the UK, for use in the UK. The customers are complaining because you are not properly informing them of the situation.
If I were you, make a comment on your basket page and terms page and see if the complaints stop. A simple "Orders to the European Union will be subject to VAT at the local rate" will help them. The best thing to do is try it for a fortnight and see how many orders are lost, or how much the complaints are reduced. Then you can decide whether shipping to the EU is worth the hassle.
As for me, I plan to move to a state with no sales tax and try to work with other small business to prevent this from happening. Thanks for your opinion and the good discussion!
