Can anyone explain this DHL Import duty bill?

Hoping someone can explain something to me about import tax as I am convinced I've missed something and I'm impatient to receive the watch I've ordered so don't want to wait for DHL to come back to me if I don't need to.

I bought a watch from Worn & Wound's shop, which is US based.
Its full price is £560 but there was an offer on which reduced it to £476.

https://i.imgur.com/garz4MB.png

I factored in 20% VAT upon import to the UK which I calculate to be £95.20. Even if W&W declared the watch's full value this would be £112.00.

Today I have received an invoice from DHL for import duty/charges which comes to £132.83 of which VAT is £121.63.

https://i.imgur.com/mv8nM9N.png

Given the specific number I am sure there must be something I'm missing but for the life of me I don't get what it is. The shipping is free, DHL's charge presumably doesn't come with additional VAT to me, and I've paid nothing more than the sale price of the watch, £476, so can anyone clear it up please?

The watch is due for delivery Friday and it's not clear how quickly DHL will reply to my email on this so thought I'd come to the TZ experts! If the figure is correct I will just pay it and get the watch on Friday. If not then it's obviously worth the delay and I can spend the saving on a few beers!

Thanks in advance.

Could it be that the value on the packet is in usd and for some reason dhl have taken it as gbp in their vat calculations?
Quick estimated the numbers seems to fit i think.

There is no way to see a photo of the shipment?

DHL will also add their customs clearance / handling charge.

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Originally Posted by Routers

DHL will also add their customs clearance / handling charge.

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That's the £11 on invoice, doesn't explain OP's 'excess' VAT.

They probably charged VAT on shipping, might be free to customer but still a VATable cost.

No, was wrong about this - https://www.gov.uk/guidance/vat-on-p...elivered-goods

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If you deliver goods to your customers but make no additional charge
If delivery is free, or the delivery cost is built into the normal sales price, VAT is accounted for on the full sales price based on the liability of the goods being sold.

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How do they get £121.63 though?

Have you tried asking DHL?

£476 = $602.

602 x 20%. = 120 which is virtually the number (121) you have been charged for VAT.

Really need to see the shipping invoice attached to the package.

Possibilities.

1. The shipping invoice has the currency as £ but figure is the $ amount. A seller shipping doc error.

2. The shipping invoice has the currency as $ and the figure is the correct $ amount. Customs clearance has made an error and not converted $ to £.

Ask the seller for a copy of the shipping invoice/docs which might be different to any commercial invoice you have already received.


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I have had errors in the past where they have used the dollar rate as GBP. But also the shipping may be Free to you but of course there will be a cost. Perhaps it is that cost added to the customs amount which has pushed it up to the figure you mention?

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Originally Posted by BillyCasper

£476 = $602.

602 x 20%. = 120 which is virtually the number you have been charged for VAT.

Really need to see the shipping invoice attached to the package.

Possibilities.

1. The shipping invoice has the currency as £ but figure is the $ amount. A seller shipping doc error.

2. The shipping invoice has the currency as $ and the figure is the correct $ amount. Customs clearance has made an error and not converted $ to £.

Ask the seller for a copy of the shipping invoice/docs which might be different to any commercial invoice you have already received.


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and with the addition of 20% of the actual cost of the shipping??

I believe DHL will add the cost of shipping to the purchase price before adding the VAT and customs handling charge. Does that get you closer to their number?

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Originally Posted by TaketheCannoli

I believe DHL will add the cost of shipping to the purchase price before adding the VAT and customs handling charge. Does that get you closer to their number?

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Free postage can be translated to be 'postage included' (it's getting paid for by the OP one way or another) - and of course VAT is calculated on the Item+postage cost.

DHL et all -don't take a whole heap of time of diligence in calculating, but strangely you can always guarantee that it will be in their financial favour.

Reckon they have simply taken the USD value and made it a GBP value.

In the hope that people don't notice and just pay it. Crafty.

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Originally Posted by blackal

Reckon they have simply taken the USD value and made it a GBP value.

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Originally Posted by TaketheCannoli

I believe DHL will add the cost of shipping to the purchase price before adding the VAT and customs handling charge. Does that get you closer to their number?

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Well, as I’ve posted above, they shouldn’t.

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Originally Posted by redmonaco

and with the addition of 20% of the actual cost of the shipping??

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I reckon:

If the price of the goods includes delivery to the buyer in the UK, then VAT should be calculated on that basis £476/$602. However the shipping invoice should make that clear with a note to that effect or by setting the Delivery/Trade Term field to something like Delivered At Place (in the UK).

If the seller put the value as £476 and didn't make it clear that delivery charges were included in the sales price and set the shipping invoice delivery/trade term field to something like Free Carrier JFK (or whatever the US term is), then I guess it's possible that customs would interpret this as meaning that freight wasn't included and add a supplement based on some form of table or calculation or info provided by the carrier.

Really need to see the docs that accompanied the parcel: currency, amounts, terms of trade.

I'm still betting on a currency cock up.

DHL cocked up my bill when my Dornbluth arrived from Germany. They released the watch without it being paid and then I sent them the invoice, many times, in an attempt to get the correct bill

D


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Some interesting theories here. Thank you.
I have emailed DHL but as explained initially I am keen not to dispute if no mistake has been made in the simple interests of getting the watch as soon as possible. As yet DHL has not replied.
I will ask for a photo of the package when they do in case this is a simple conversion error.
The conversion error-VAT on actual shipping cost combo might bring us to about the figure I have been quoted but obviously neither additional cost should be added.
Slightly concerned about helidoc s experience above. Did you resolve it to your satisfaction or simply end up overpaying?


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So I have spoken to DHL. The declared value by W&W is $771.49. This is made up of the value of goods $710.34, shipping: $53.41, insurance: $7.74.
DHL has converted that to £608.15 and therefore correctly ended up with £121.63 VAT.
So W&W have added the cost of everything and declared that as the “value” of the product I bought.
The actual value should surely just be the purchase price right?
I have looked at the terms and conditions on the W&W site which state that international shipping is “free for purchases over $600” which this was (and you can see on my invoice above that it is declared to me as “free”). Insurance is paid by them as standard on all goods they sell but surely the insurance and shipping is their cost not mine?
I am pretty sure I am gonna have to suck this up but I am wondering exactly how you would approach W&W about this? And would you pay before you hear from them? I suspect there is no way of amending the value as far as HMRC is concerned so short of sending it back I think I will have to pay and hope to agree a refund by W&W. I will be emailing them shortly so any ideas would be gratefully received!


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What a pain - but other than telling the vendor that the lack of transparent pricing is not helpful for overseas purchases, I doubt it will be worth pursuing for the amount extra you have paid (I did read on one of the .gov pages that they use the full price for calculating tax rather than the discount price in some circumstances)

If you don’t pay you won’t get your watch.

I reckon W&W is at fault. Their shipping invoice should have reflected what you paid and import duties and taxes would have been levied based on this.

Get your watch with a copy of the shipping invoice. I would then go back to W&W with the differing commercial and shipping invoices, claim a partial refund or something in lieu. However, I wouldn’t burst a blood vessel, it’s £30.

How does this happen? Perhaps poor integration between their customer facing sales system (actual prices including promotions) and backend stock and shipping system (standard list pricing).


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I think VAT is calculated on the 'Customs Value' of an imported item. The Customs Value is calculated by adding purchase price, shipping, insurance and Import Duty. So you pay VAT on everything. I think that's how it works, anyway.

This might shed some light: https://www.gov.uk/guidance/working-...imported-goods

You probably have both import duty and VAT to pay, so nearer 25% the purchase cost.
That said I had something similar years ago on an order from the US where the vendor didn’t include a shipping fee as it was free but customs decided to estimate a shipping charge anyway and then charge VAT in that


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Originally Posted by BillyCasper

If you don’t pay you won’t get your watch.

I reckon W&W is at fault. Their shipping invoice should have reflected what you paid and import duties and taxes would have been levied based on this.

Get your watch with a copy of the shipping invoice. I would then go back to W&W with the differing commercial and shipping invoices, claim a partial refund or something in lieu. However, I wouldn’t burst a blood vessel, it’s £30.

How does this happen? Perhaps poor integration between their customer facing sales system (actual prices including promotions) and backend stock and shipping system (standard list pricing).


Sent from my iPad using Tapatalk

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This is pretty much exactly where I'm at too. I'll go back to W&W with the facts and see what they say but I'm pretty sure they're not gonna pay me anything back. I'll still enjoy the watch just the same but it'll make me think twice before buying from abroad in future.

Thanks for all the comments and ideas gents.

If we're all sitting here trying to work out the UK tax and duty system, what chance does a US company have?

My interpretation is that the $710.34 is the value in USD of the FULL (non discounted) list price of the watch (GBP 560) calculated at the prevailing exchange rate at the time of declaration. Full value may be needed for insurance purposes or as per their own policy. From a tax perspective you are charged based on the value received not price paid ( for example the taxing of gifts at the expense of the recipient above a certain value), hence the levy of taxes on full price plus postage. The postage has value to you even though you did not pay for it. Not a tax expert and may be corrected, but this is my current understanding.

I really could not be doing with this web of intricacy, hence I will not buy a watch from outside the UK!
My thanks to all posters though for the learning curve. :encouragement:

WTO AGREEMENT ON CUSTOMS VALUATION

Transaction Value

The Agreement states that the primary basis for the customs value of imported goods shall be the “transaction value” of the goods - the price that is actually paid or payable when the goods are sold for export.

And in this particular case, quite reasonably, the seller’s documents accompanying the goods were used. However these documents don’t reflect the transaction value.

Might be a good reason, might be an oversight.


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It has always been my understanding that the VAT is payable on the entire amount including postage/courier.

It looks like the sender has overstated the value to obtain full insurance cover should the package be lost or damaged.
i.e. the full value, less any discount, plus the $58 insurance excess (or insurance payment).
Very naughty.

I once paid $65 (£54) for a bike camshaft, plus $35 shipping from USA, plus imort duty and handling fees = £114 in total, for a £54 motorcycle part.

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Originally Posted by Carlton-Browne

It has always been my understanding that the VAT is payable on the entire amount including postage/courier.

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True, in this case the transaction value included delivery charges (excluding clearance fee), so the primary method could be used.

Customs will use supplementary methods to calculate the delivered value if the transaction value is unknown or incomplete.

Oh for the days of a customs union with our nearest and dearest trading partners, life was so much easier.


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Originally Posted by Carlton-Browne

It has always been my understanding that the VAT is payable on the entire amount including postage/courier.

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Pretty sure when I last bought direct from Eddie for delivery here in Spain they hit me up for the cost of the watch and the delivery cost and another 3 percent import tariff...So as a rule of thumb I assume there will be at least 25 percent on top of the purchase and delivery charge, that way I'm not disappointed!

AS BC observed you no pay, you not get watch.

GRRRR Wotsit, only upsides they said.

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Originally Posted by I AM LATE!

My interpretation is that the $710.34 is the value in USD of the FULL (non discounted) list price of the watch (GBP 560) calculated at the prevailing exchange rate at the time of declaration. Full value may be needed for insurance purposes or as per their own policy. From a tax perspective you are charged based on the value received not price paid ( for example the taxing of gifts at the expense of the recipient above a certain value), hence the levy of taxes on full price plus postage. The postage has value to you even though you did not pay for it. Not a tax expert and may be corrected, but this is my current understanding.

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If the delivery cost is factored into the selling price it has no extra value.

Has anyone ever ordered from abroad and not been hit with import duty?

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Originally Posted by Kingstepper

If the delivery cost is factored into the selling price it has no extra value.

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Given the calculation of value reference transaction price paid as defined by the WTO (that our resident KES fan helpfully pointed out) then you get no dispute from me in this context.

However from an economic perspective Price and Value are two separate and sometimes distinctly different concepts. I had always believed these concepts feature in the VAT placed on gifts even though the recipient has not paid anything for it. Not sure if it applies to Free Shipping though based on this discussion.

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Originally Posted by Reeny

It looks like the sender has overstated the value to obtain full insurance cover should the package be lost or damaged.
i.e. the full value, less any discount
Very naughty.

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It is this element specifically that has frustrated me, frankly. The rest may or may not be correct. It’s not a huge amount of money but it’s the principle, which is important to me.
As a result I will not be buying from W&W again I do not think.


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Originally Posted by tobywatches

So I have spoken to DHL. The declared value by W&W is $771.49. This is made up of the value of goods $710.34, shipping: $53.41, insurance: $7.74.
DHL has converted that to £608.15 and therefore correctly ended up with £121.63 VAT.
So W&W have added the cost of everything and declared that as the “value” of the product I bought.
The actual value should surely just be the purchase price right?
I have looked at the terms and conditions on the W&W site which state that international shipping is “free for purchases over $600” which this was (and you can see on my invoice above that it is declared to me as “free”). Insurance is paid by them as standard on all goods they sell but surely the insurance and shipping is their cost not mine?
I am pretty sure I am gonna have to suck this up but I am wondering exactly how you would approach W&W about this? And would you pay before you hear from them? I suspect there is no way of amending the value as far as HMRC is concerned so short of sending it back I think I will have to pay and hope to agree a refund by W&W. I will be emailing them shortly so any ideas would be gratefully received!


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Shipping WAS free to you. You weren't charged for it. BUT someone had to pay it. VAT is charged on the TOTAL of goods value + Shipping charge (including insurance is there was any).

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Originally Posted by redmonaco

Shipping WAS free to you. You weren't charged for it. BUT someone had to pay it. VAT is charged on the TOTAL of goods value + Shipping charge (including insurance is there was any).

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I posted above from the gov.uk website: -

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If you deliver goods to your customers but make no additional charge

If delivery is free, or the delivery cost is built into the normal sales price, VAT is accounted for on the full sales price based on the liability of the goods being sold.

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Thought I should at least furnish this thread with the watch in question.
I'm really enjoying it so far. My 1st Boldr. Some lovely details and completely different to anything else I've had or even seen I think. A bit mad but that's a bit of me.

https://i.imgur.com/26LwpYq.jpg

Thanks for all the comments on the thread. Unless I make some progress with Worn & Wound I'll leave it there.