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Thread: Anyone clued up on new import vat rules

  1. #1
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    Anyone clued up on new import vat rules

    I am getting some cycle wheel rims and a couple of other new old stock bits sent to me from a friend in Italy. The value of them is around £120. They are to be declared as a gift

    I know that there is a threshold of £135 above which anything whether a gift or not attracts 20% vat but what is the situation with gift items under that value.

    I bought some items last week on eBay from the Netherlands at £100 and eBay collected the 20% vat from me but I’m unclear on the rules with gifts at values below £135

    Has anyone any experience of the process

  2. #2
    Think gifts over £39 will attract VAT.

    https://www.gov.uk/government/public...nal-post-users
    Last edited by Kingstepper; 16th May 2022 at 20:52.

  3. #3
    Grand Master markrlondon's Avatar
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    As long as your friend declares them honestly on the customs declaration then you'll be hit for VAT (and courier's handling fee) on import at that value. Possibly Customs Duty too, although I don't know what rate bicycle parts might attract, if any.

    This, https://www.gov.uk/trade-tariff, will allow you to find what Customs Duty rate (if any) will apply. If you can be bothered to work it out.

    Of course, that's if your friend completes the CN22 honestly. Perhaps they were only worth £10.

    For the avoidance of doubt, I am not advocating dishonesty. That would be a Bad Thing.





    ** edit **

    Crossed out as incorrect. No Customs Duty will be due. Thanks to jukeboxs for the correction.
    Last edited by markrlondon; 16th May 2022 at 21:44.

  4. #4
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    Google is your friend.
    https://www.gov.uk/government/public...nal-post-users


    Quote Originally Posted by markrlondon View Post
    ...

    Of course, that's if your friend completes the CN22 honestly. Perhaps they were only worth £10.

    For the avoidance of doubt, I am not advocating dishonesty. ...
    The OP clearly states the value at c£120.

  5. #5
    Grand Master markrlondon's Avatar
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    Quote Originally Posted by jukeboxs View Post
    The OP clearly states the value at c£120.
    Oops, yes. I forgot that shipments at that value are exempt from Customs Duty.

    Thanks for the correction.

    I should've been more careful.
    Last edited by markrlondon; 16th May 2022 at 21:57.

  6. #6
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    Well having followed the link to the advice document I’m still no clearer on it really.

    At the bottom of section 2.3 in the table it shows items up to £135 no Customs Duty - No import VAT But then in section 2.4 it states gifts of a value above £39 are subject to Import VAT.

    Am I understanding this correctly that if something is purchased from abroad and is under £135 then it is for the seller there to collect the VAT, if it is over £135 then the VAT is collected on arrival. In the case of a gift then anything over £39 attracts VAT on arrival in the UK?

    In my case because the item is worth £120 whether it is shown as a commercial purchase or a gift makes no difference it still attracts import VAT.

  7. #7
    Quote Originally Posted by Ashtons99 View Post
    Well having followed the link to the advice document I’m still no clearer on it really.

    At the bottom of section 2.3 in the table it shows items up to £135 no Customs Duty - No import VAT But then in section 2.4 it states gifts of a value above £39 are subject to Import VAT.

    Am I understanding this correctly that if something is purchased from abroad and is under £135 then it is for the seller there to collect the VAT, if it is over £135 then the VAT is collected on arrival. In the case of a gift then anything over £39 attracts VAT on arrival in the UK?

    In my case because the item is worth £120 whether it is shown as a commercial purchase or a gift makes no difference it still attracts import VAT.
    No, if yours was a commercial purchase it would be subject to supply VAT (collected by the seller) not on import (collected by HMRC). Obviously a private person sending a gift will not be registered and cannot collect supply VAT.

    In practice though your item, gift or not, because over £39, will be subject to VAT of some sort just would be collected differently if a gift or not.

  8. #8
    Grand Master markrlondon's Avatar
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    Quote Originally Posted by Ashtons99 View Post
    At the bottom of section 2.3 in the table it shows items up to £135 no Customs Duty - No import VAT But then in section 2.4 it states gifts of a value above £39 are subject to Import VAT.
    The language used is both precise and confusing. The reference to "No Import VAT" in the table at that point means that "UK supply VAT" should be charged instead by the seller on non-gift items valued at £135 or below.

    In practice, if the seller can't do this (e.g. if it's a private sale taking place outside of a market (such as eBay) which would charge the VAT on the seller's behalf) then import VAT is charged at the time of import in the traditional way.

    For gifts, section 2.4 is the part to consider which confirms that VAT will be charged on shipments valued at more than £39 and Customs Duty (if due) will be charged on shipments valued at more than £135. These taxes will be charged at the time of import (and so a courier's service fee will be due as well).

    Quote Originally Posted by Ashtons99 View Post
    Am I understanding this correctly that if something is purchased from abroad and is under £135 then it is for the seller there to collect the VAT, if it is over £135 then the VAT is collected on arrival.
    The following is my understanding.

    For non-gifts (ignoring items that attract Excise Duty):-
    (1) If the shipment is valued at £135 or less then HMRC would like the foreign vendor to collect UK VAT and remit this to HMRC. A vendor can either register to do this themselves or, if they are selling through a marketplace like eBay, then the marketplace can and will do it.
    (2) If the shipment is valued at more than £135 then neither the seller nor marketplace will collect the VAT for HMRC. Instead it will be charged as and when the item enters the UK, in the old fashioned way.
    (3) If the shipment is valued at more than £135 then Customs Duty may or may not be due too when the shipment is imported, depending on the category of items in the shipment.
    (4) In fact, foreign vendors can also register for UK VAT and can therefore charge UK VAT on items valued at over £135, just as a UK-based VAT-registered vendor would do. Some companies have done this, others have not. Most haven't.

    For gifts (again ignoring Excise Duty items):-
    (1) If the shipment is valued at £39 or less then no VAT will be due.
    (2) If the shipment is valued at £135 or less then no Customs Duty will be due (if any was to be due).
    (3) As far as I know, the sender cannot prepay any VAT or Customs Duty. This means that if any is due then it will be collected at the time of import in the traditional way (and a courier's service fee will be due).

    Simples!

    Correct me if I'm wrong anyone. :-)

    Quote Originally Posted by Ashtons99 View Post
    In the case of a gift then anything over £39 attracts VAT on arrival in the UK?
    Yes.

    Quote Originally Posted by Ashtons99 View Post
    In my case because the item is worth £120 whether it is shown as a commercial purchase or a gift makes no difference it still attracts import VAT.
    Yes.

  9. #9
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    Quote Originally Posted by Kingstepper View Post
    No, if yours was a commercial purchase it would be subject to supply VAT (collected by the seller) not on import (collected by HMRC). Obviously a private person sending a gift will not be registered and cannot collect supply VAT.

    In practice though your item, gift or not, because over £39, will be subject to VAT of some sort just would be collected differently if a gift or not.
    Thanks I think collectively you have about clarified it for me.

    Obviously the lower the value shown on the shipping document the less VAT it will attract which I suppose would lessen the bill but create problems recovering the value of the goods if they go missing. We have exchanged vintage cycle parts for quite some time at no cost other than shipping but it could end up where the VAT element makes it prohibitive without drastically down valuing the goods on the shipping document.

  10. #10
    Quote Originally Posted by markrlondon View Post
    The language used is both precise and confusing. The reference to "No Import VAT" in the table at that point means that "UK supply VAT" should be charged instead by the seller on non-gift items valued at £135 or below.

    In practice, if the seller can't do this (e.g. if it's a private sale taking place outside of a market (such as eBay) which would charge the VAT on the seller's behalf) then import VAT is charged at the time of import in the traditional way.

    For gifts, section 2.4 is the part to consider which confirms that VAT will be charged on shipments valued at more than £39 and Customs Duty (if due) will be charged on shipments valued at more than £135. These taxes will be charged at the time of import (and so a courier's service fee will be due as well).



    The following is my understanding.

    For non-gifts (ignoring items that attract Excise Duty):-
    (1) If the shipment is valued at £135 or less then HMRC would like the foreign vendor to collect UK VAT and remit this to HMRC. A vendor can either register to do this themselves or, if they are selling through a marketplace like eBay, then the marketplace can and will do it.
    (2) If the shipment is valued at more than £135 then neither the seller nor marketplace will collect the VAT for HMRC. Instead it will be charged as and when the item enters the UK, in the old fashioned way.
    (3) If the shipment is valued at more than £135 then Customs Duty may or may not be due too when the shipment is imported, depending on the category of items in the shipment.
    (4) In fact, foreign vendors can also register for UK VAT and can therefore charge UK VAT on items valued at over £135, just as a UK-based VAT-registered vendor would do. Some companies have done this, others have not. Most haven't.

    For gifts (again ignoring Excise Duty items):-
    (1) If the shipment is valued at £39 or less then no VAT will be due.
    (2) If the shipment is valued at £135 or less then no Customs Duty will be due (if any was to be due).
    (3) As far as I know, the sender cannot prepay any VAT or Customs Duty. This means that if any is due then it will be collected at the time of import in the traditional way (and a courier's service fee will be due).

    Simples!

    Correct me if I'm wrong anyone. :-)



    Yes.



    Yes.
    No, it attracts supply VAT if a commercial purchase. Suppose it could be shown as a commercial purchase but it wouldn't be.
    Last edited by Kingstepper; 16th May 2022 at 23:19.

  11. #11
    Grand Master markrlondon's Avatar
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    Quote Originally Posted by Kingstepper View Post
    Quote Originally Posted by markrlondon View Post
    Quote Originally Posted by Ashtons99 View Post
    In my case because the item is worth £120 whether it is shown as a commercial purchase or a gift makes no difference it still attracts import VAT.
    Yes.
    No, it attracts supply VAT if a commercial purchase.
    Ah yes, good point, although this makes no difference in practice. 20% VAT is 20% VAT whether it is "supply VAT" or "import VAT".

    Neither can be reclaimed if one is not VAT registered. And either or both can be reclaimed if one is VAT registered.
    Last edited by markrlondon; 16th May 2022 at 23:23.

  12. #12
    Quote Originally Posted by markrlondon View Post
    Ah yes, although this make no difference in practice. 20% VAT is 20% VAT.
    Yes as I said, will be VAT of some sort.

    Think confusion is arising here because some are equating 'no import VAT' with no VAT.

  13. #13
    Grand Master markrlondon's Avatar
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    Quote Originally Posted by Kingstepper View Post
    Think confusion is arising here because some are equating 'no import VAT' with no VAT.
    This is a natural assumption in general. The difference between "import VAT" and "supply VAT" is a fine distinction which, in fact, has no significance at all to non-VAT registered recipients.

    From most people's perspective, it is only worth noting the difference when trying to parse HMRC guidance notes.

  14. #14
    Quote Originally Posted by markrlondon View Post
    This is a natural assumption in general. The difference between "import VAT" and "supply VAT" is a fine distinction which, in fact, has no significance at all to non-VAT registered recipients.

    From most people's perspective, it is only worth noting the difference when trying to parse HMRC guidance notes.
    Yes agreed, it is made confusing.

  15. #15
    Quote Originally Posted by Ashtons99 View Post
    Thanks I think collectively you have about clarified it for me.

    Obviously the lower the value shown on the shipping document the less VAT it will attract which I suppose would lessen the bill but create problems recovering the value of the goods if they go missing. We have exchanged vintage cycle parts for quite some time at no cost other than shipping but it could end up where the VAT element makes it prohibitive without drastically down valuing the goods on the shipping document.
    Misrepresenting the true value of the goods is called valuation fraud. Best to declare the correct value and pay the VAT due. Shame we are not still in the single market…..

  16. #16
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    Ah the gift that just keeps on giving!

  17. #17
    Everything imported into the UK regardless of value,sale or gift attracts VAT on entry.

    The UK has abolished LVCR (was 22 then 15 now zero) due to abuse from the channel islands.

    If you were sending a gift worth less than 39 to your friend that would not attract VAT when it entered the EU, but anyting going this way will.

  18. #18
    Quote Originally Posted by MB2 View Post
    Everything imported into the UK regardless of value,sale or gift attracts VAT on entry.

    The UK has abolished LVCR (was 22 then 15 now zero) due to abuse from the channel islands.

    If you were sending a gift worth less than 39 to your friend that would not attract VAT when it entered the EU, but anyting going this way will.
    https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

    VAT

    VAT is charged on all goods (except for gifts worth £39 or less) sent from:

    • outside the UK to Great Britain
    • outside the UK and the EU to Northern Ireland

    VAT is not charged on goods that are gifts worth £39 or less.
    You pay VAT when you buy the goods or to the delivery company before you receive them. If you have to pay VAT to the delivery company, it’s charged on the total package value, including:

    • the value of the goods
    • postage, packaging and insurance
    • any duty you owe

    VAT is charged at the VAT rate that applies to your goods.

  19. #19
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    I’ve just bought a set of bike rims off an eBay dealer in the Netherlands for £100. EBay have added the vat on so with shipping I’ve paid £130. Just hoping I don’t get stung again on double import tax

  20. #20
    Grand Master markrlondon's Avatar
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    Quote Originally Posted by Ashtons99 View Post
    I’ve just bought a set of bike rims off an eBay dealer in the Netherlands for £100. EBay have added the vat on so with shipping I’ve paid £130. Just hoping I don’t get stung again on double import tax
    The system where markets like eBay collect the VAT usually works well in my experience so you should not be hit again.

  21. #21
    Grand Master MartynJC (UK)'s Avatar
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    Quote Originally Posted by MB2 View Post


    If you were sending a gift worth less than 39 to your friend that would not attract VAT when it entered the EU, but anyting going this way will.

    incorrect. It depends on the country. Sadly I now live in a country that has ZERO threshold on import duty and VAT. I even get charged when there is zero VAT because of the inspection fee (thanks CTT). So any import is subject to IVA unless it is zero rated (documents for example).

    So a pair of socks at 5€ second hand - will get slapped 23% IVA

    But at least the sun shines 300 days out of 365!
    Last edited by MartynJC (UK); 26th May 2022 at 07:38.
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