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Posted Thu, 10 Nov 2022 11:04:31 GMT by CBoyle
Dear HMRC colleagues, Since UK left EU the regulations to Import VAT and Duties have never been clear and are always very confusing, therefore we decided to register VAT anyway despite we are just a start-up and a very small UK company The questions I have for you since the day one I begin trading, no one actually have any concrete answers for me, therefore, I decided to ask here, and here are some background from you: 1. My company is an UK VAT registered online business only, so we basically sell products solely on our website, it's an online store we own the domain and it's not Amazon or Etsy those online marketplace. 2. Most products sold on our website are from the suppliers based in the EU countries, we don't hold stocks so the products are outside the UK when it is sold to customers. 3. All the prices on our website are VAT included. 4. The product(s) is shipped directly to the customers from the suppliers outside the UK whenever the transaction happens. 5. Base on the shipping note I have from my suppliers, I think but I am not sure, the company is the record of importer, only the delivery address is to the customers who purchase the product(s). So far the overall operation seems to be OK, as most customers' purchases are below £135 threshold, there is no any surprise on the additional Import VAT and duties charges come up until recently. As it's a Christmas shopping season now customers start buying some expensive stuffs that are above £135, which I have no complaints, but I begin to worry will the company or customers face some surprise additional charge on import VAT and duties, despite the fact that the prices on the website have already include VAT? As I just witness from the courier's tracking info a recent shipment was hold at customs due to "Customs charges raised" which I have no idea what it was and then "Revised Customs charges raised" and "Released from customs". What does it mean? And will the company or customers being double charged the VAT? And what should I do to prevent it? Many thanks! CBoyle
Posted Fri, 11 Nov 2022 08:47:39 GMT by Jason Croke
"Customs charge" and "released from customs" usually means import duty.....goods over £135 are subject to import duty, what rate of duty, depends on what the goods are and their origin. If a toy drone is made in China and shipped to a warehouse in France and then you ask that French warehouse to dropship from France to UK, the origin of the drone is still China and if the UK has import duties on Chinese made drones, then it'll have import duty applied when the goods enter the UK. VAT is calculated on the duty inclusive price. So if your goods are valued at £200 and the duty on these items is 5% then the revised value of the goods is £210 and then we add import VAT (£210 x 20% = £42 VAT). So if your website charges the customer £240 (being £200 for the goods plus £40 VAT), when the goods enter the UK, the freight agent will have to pay £10 import duty and an additional amount of VAT of £2, which they will then recharge back to you (£10+£2+admin fee). So for every £240 product you sell, you are making less because you've not factored in import duty on goods/shipments over £135. You need to speak to your Accountant - you might be a very small company/start-up, and most start-ups try and Google their way out of problems to save money/paying for advice, but if you get this wrong, you may see your margins disappear. Whether your customer pays double VAT depends on what shipping invoice is sent with the product, what the Incoterms are (DAP/DDP), what instructions are given to the freight agent/shipper, etc. HMRC guidance on importing is here
Posted Mon, 14 Nov 2022 12:57:19 GMT by HMRC Admin 17
C Boyle,

If the imports you are making are over £135 in value then there will need to be import VAT paid for these once the goods enter the UK.

If the consumer is the importer of these goods then they will be charged the import VAT and they would need to pay this charge before the goods are released.

If you are the designated importer of these goods then it would be yourself that pays the VAT on the goods.If this is the case then you will be selling
the goods in the UK and so would then need to charge the sales VAT on the goods to the consumer.

You would however be able to recover the import VAT charged to you as a VAT registered importer of goods.

Essentially because the goods are over £135 in value then import VAT has to be paid,it will depend on the arrangement you have
with the consumer as to who will actually pay this.

Thank you.
Posted Mon, 14 Nov 2022 13:23:10 GMT by CBoyle
Dear HMRC Admin, Thank you for your reply. Do you mean even though the pricing on our website include VAT, we are a UK registered business and UK VAT registered as well, the UK customers will still need to pay import VAT when their order above £135 if the goods are shipped from EU or other countries? Many thanks.
Posted Mon, 14 Nov 2022 13:30:28 GMT by CBoyle
Hi Jason, Thank you for your reply. We do factor customs duties in our pricing, so the pricing/margin is not our main concern at the moment, but thanks again for the reminder, we will talk to our accountant to make sure we are properly pricing our products. Thank you.
Posted Mon, 14 Nov 2022 14:21:20 GMT by HMRC Admin 17

Yes that is correct.

Goods being imported in to the UK will be subject to import VAT if brought in from the EU or beyond.

Thank you.
Posted Mon, 14 Nov 2022 17:03:48 GMT by CBoyle
Hi HMRC Admin, Thanks for the quick response. I am now confused. I thought the reason we have to add and charge sales VAT upon sell on OMP is to prevent (probably not correct wording) the UK customers being charged import VAT when the goods enter the UK? So when we do the tax return we can show the customers actually have paid the VAT? Thank you.
Posted Wed, 16 Nov 2022 17:22:51 GMT by Customs oldtimer
Hi C Boyle The addition of sales VAT is only required for imported goods up to £135 per consignment. Goods below £135 are also exempted from being charged import duties. Normal import procedures must apply for shipments above £135 so import VAT and import duty if applicable become liable. It will depend on who is named as the importer whether you or your customers will be charged or you will. If there is risk the customer is charged you can pay this for them but that will need to be agreed with the courier. You really need to find out how your goods are being declared and who is the importer. More importantly you should tell the courier how you want the goods to be imported. Once this has been decided then you need to make sure your tax position is correct. If you are the importer then there are in effect two VAT transactions for goods over £135 1. The import VAT (which is recoverable as you are VAT registered) 2. The sales VAT you charge the customer As Jason Croke says you do need some professional advice . Also the HMRC link he quoted explains this.

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