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Your question is curious - why would you consider using a VI1 as some form of proof of Origin for customs purposes. The VI1 serves the purpose it is intended to- to facilitate the import of wines meeting food quality standards into the EU.
Most countries do not routinely require any documentary proof of Non preferential origin. As you have stated it is usually sufficient to state the country of origin on the invoice.
If evidence is required then the receiving country will usually stipulate their requirements and the Chamber of Commerce can issue documentary proofs of non preferential origin.
I don't work for HMRC and I cannot provide specific advice on whether you must register for VAT in the UK . Your understanding is not quite correct, so as this is complex and potentially costly if you get it wrong you should probably seek some professional advice.
The fact you sell goods priced between £10 and £2200 does not determine whether you need to register for VAT or not.
What I have described in my earlier post are the different VAT treatments for individual orders/ consignments above and below £135.
I have also only mentioned requirements for sales to individuals not business customers.
If you sell through an on line market place it is the market place who must be registered for VAT and account for shipments below £135 as supply VAT. I.e. the VAT will be included in the price paid by the customer. As the VAT has been/ will be accounted for as supply VAT no import VAT is due at import .
As I said you should check this with your market place to confirm this is what they are doing for your transactions.
You must however register for VAT if:
You ( as a non UK seller) hold any stock for sale, irrelevant of value, in the UK
You ( as a non UK seller) are selling goods in individual consignments below £135 directly ( not through a marketplace) to consumers in the UK.
I don't get the significance of the values you have mentioned in your two examples.
I am also assuming your sales are to UK consumers and not businesses
- Import duty is waived on goods valued below £135
- The old VAT waiver for goods below £15 no longer applies - VAT is applied to goods of any value.
- Where the goods are located outside the UK and below £135 UK VAT should be charged to the customer at point of sale.
- If the sale is made through a online market place eg Ebay then they should charge and account for the VAT. They should be VAT registered in the UK to do this. No import VAT or customs duty is charged. I suggest you confirm with Ebay that this is how the VAT is being accounted for on your sales.
- If you sell goods located outside the UK direct to consumers then you would need to register for VAT in the UK and charge the customer UK VAT at the point of sale and account for the VAT through your VAT return. No import VAT or customs duty is charged.
- Where the goods are valued above £135 then normal import rules apply I.e. import duty and import VAT is due at the time of import. If the customer is the importer the customer will pay this prior to delivery. no further VAT accounting is required.
-If you are an overseas seller who owns goods of any value that are located in the UK at the point of sale you must register and account for VAT on any sales you make directly to customers in Great Britain or Northern Ireland.
- Its worth noting that the £85,000 turnover threshold to register for VAT does not apply to overseas sellers.
You mention selling through an on line platform so you should also look at;
As HMRC say the Revenue & Customs brief 15/2020 has been with drawn - this is usually when the information it contains is now included in guidance.
In short the brief was a reminder that only the owner of the imported goods is entitled to recover the import VAT ( as input VAT).
It gave specific examples of where this could be an issue including companies importing customer owned products for repair.
Assuming you are going to re export the repaired goods back to the owner it is possible to mitigate/ suspend the import VAT (and any import duties) by using a customs duty relief called inward processing.
If you are regularly importing goods for repair or a single shipment is valued over £500,000 then a prior authorisation will be required from HMRC.
If the imports for repair are infrequent then you are permitted to import up to three times in a rolling 12 month period without prior authorisation
Alternatively the owner can be the importer and if registered for VAT in the UK would be able to reclaim the import VAT subject to normal rules.
As posted in a previous thread
It is not compulsory to register for the EU IOSS scheme if you wish to send goods below €150 to non VAT registered customers in the EU- It is is an option / simplification that non-EU based businesses can choose to use.
It still remains possible to for you to send goods of any value to the EU with either:
- the end customer paying the import VAT ( & duty if applicable) due at import.
- or if you didn't want the customer to pay directly you can use a couriers delivered duty paid service- in this way the fees would be collected from you as the seller.
Presumably this is what you already do for customers in other countries to pay their local taxes and import duties.
I am not an HMRC representative nor a politician however I understand that until there is an agreement with the EU on whether UK business can register for the EU IOSS scheme in the UK as well as the EU, HMRC are unable to make a portal available unilaterally
the details of how to claim duty paid when you re- export an item
If the import was by post or parcel force the form is a BOR285
Under DAP Incoterms 2020 the seller has no obligation to clear the goods for import , pay any import duty or carry out any import formalities so your customer should be the importer and pay the duty. You and your customer should be clear on who is responsible for what and who is paying for what.
You would provide the retrospective evidence yourself by providing the statement on origin wording on a replacement commercial document ie packing list or invoice. You will need to check the origin rule for each product as they may be different to the specific example I gave
When you make a statement on origin you need to keep your own records that the goods meet the origin requirements as HMRC are entitled to verify this at a later date.
If the goods are manufactured in Italy (EU) then they cannot go back to the EU under the trade agreement duty free, as the agreement doesn't cover returned goods. Goods returned to the EU can go back duty free only if you have details of the export declaration when they left the EU to prove they were originally shipped from the EU.
Your transport company is correct - just stating UK origin on your invoice will not suffice. We have a trade agreement with the EU that which sets out what the requirements are to claim the reduced/nil duty on import.
What wasn't made clear in the press coverage is that for UK exporters it does not apply to all goods sent from the UK or even everything manufactured in the UK. It can be quite complex to understand.
HMRC publish guidance here
In short for manufactured goods
1. the goods must be processed beyond minimal processes such as repacking, cutting up etc - there is quite a long list
2. the goods must meet the product specific origin rule - so you need to look up the requirements for 8425 or 8413 in Annex 3 of the agreement.
for 84 25 the rule is
CTH except from non-originating materials of heading 84.31;
MaxNOM 50 % (EXW).
This means that you have a choice of two rules
CTH means everything not UK originating used in the manufacture must be of a different tariff heading to the finished product. You cannot however include non originating products in TH 8431.
or no more than 50% of the value of the EX-Works price of the finished goods can be non UK originating.
3 If your goods meet the criteria you add the statement on origin to your invoice or other commercial document- you will need to use the wording specified . The exporter of the products covered by this document (Your VAT no) declares that,
except where otherwise clearly indicated, these products are of UK preferential origin.
4. Your customer claims the reduced duty on import - the fright forwarder should know how to do this.
You do not need proof of origin from the Chamber of Commerce - you are self certifying.
If you have been charged I assume you have agreed this with your customer as it would be normal for the importer to pay the duty. It may be possible for the named importer to reclaim the duty retrospectively from the Irish Revenue of proof of preferential origin can be provided.
I would take care in relying on a commodity code provided by a supplier. It may be a good starting point but China as do some other countries have a slightly different interpretation as we do in the UK.