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Thread: Import tax help...

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    Senior Member watercooled's Avatar
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    Question Import tax help...

    I'm after some electronics from the US but I'm a bit confused about import tax/VAT etc. The total for the goods come to about $60 and shipping is another $20 (I don't feel like waiting several weeks for delivery) for shipping. Does anyone know anything about this - the customs website doesn't make much sense

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    Re: Import tax help...

    Basically, if you haven't paid VAT on the goods to another EU country, then you're gonna get hit for Import taxes if it gets picked up by HMRC.

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    Re: Import tax help...

    You will pay 17.5% VAT (on goods + postage, so on the $80) + a handling charge from the courier. RM charge around £8, some others charge around £15.

    So in theory, you will pay around £9.24 VAT and a handling charge of £8 - £15. In my experience its usually nearer the £8. If you do have to pay the VAT keep proof, you might need it to avoid the same charges if you have to return thes tuff under warrenty.

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    Re: Import tax help...

    Hmm OK thanks for the advice. It's a real pain importing stuff, especially since you already pay US tax on what you buy! Saying that though I remember ordering something else, also electronic components but smaller so they fitted in a small jiffy bad, which came to around $60 also and I didn't have to pay anything on that - they just arrived at my door but they had the customs declaration etc filled in with the true amount. Is it just random who they charge or something?

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    Re: Import tax help...

    Its random what packages they intercept, but the number being intercepted has shot up over the last few years. If they ship USPS delivery will be by RM, which tends to have the lowest admin charge, some couriers deliver then bill you later, some tend to catch more than others. Bit of a lottery really. In the past I found more got through without charges, at the moment its the other way around.

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    Re: Import tax help...

    I asked for USPS priority mail so I think it's handled by RM on this side of the water.

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    Re: Import tax help...

    I had an £8 charge from parcel force for a model aeroplane- thats not cheap!
    Not around too often!

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    Re: Import tax help...

    The general principle is :-

    Cost of Goods = A
    Add packaging and shipping = B

    Value at arrival C = A + B

    Add import duty (note 1) = D

    Cost excl VAT E = C + D

    VAT (usually 17.5%) = E * 0.175

    Cost inc VAT F = E * 1.175

    Add RM handling charge (note 2)



    So final cost is roughly ((goods + shipping and insurance) + import duty) * 1.175 ) + RM handling fee.

    i.e. .... what Flibb said.

    Note 1) Import duty usually applies where value > £135, so not applicable in this case. If duty is less than £9, it's waived. The percentage charged varies substantially and depends on the type of goods. Some goods (alcohol, tobacco, etc) might get excise duty too.

    Note 2) RM handle a lot of custom procedures for HMRC. This includes checking paper work inspecting goods, paying the import duty/VAT to HMRC and then collecting it from you.

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    Re: Import tax help...

    I always found it unfair to charge you VAT on shipping costs, what is the HMRC excuse for doing this rather than only on the goods?

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    Re: Import tax help...

    Thanks for clearing that up everyone, I understand it much better now. I've escaped charges on previous imports (I didn't even think of it TBH), even on something with the same value but I doubt a larger package, about 3/4 DVD boxes stacked in size would slip through.

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    Re: Import tax help...

    Quote Originally Posted by Rob_B View Post
    I always found it unfair to charge you VAT on shipping costs, what is the HMRC excuse for doing this rather than only on the goods?
    A few years back you only had to pay vat on postage if it had been included in the customs declaration, there was no legal requirement to include it in the value. Think this changed when they started chargiing VAT (cant remember ifi ts duty as well) on services. I believe that UK companys should also charge VAT on non RM postal charges, havent a clue why.
    http://customs.hmrc.gov.uk/channelsP...yType=document

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    Re: Import tax help...

    With regards to VAT on postage, it's only legal if the charge is either for a) a courier company or b) if it also includes the packaging costs. Postage via Royal Mail is VAT exempt but due to the clause re: packaging, many companies will charge (and pay) VAT on their postal charges.

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    Re: Import tax help...

    Quote Originally Posted by Rob_B View Post
    I always found it unfair to charge you VAT on shipping costs, what is the HMRC excuse for doing this rather than only on the goods?
    Well, it's implicit in the nature of VAT.

    We all know it stands for "value added" tax, but think about the "value added" bit. The logic is that each stage of the process of getting goods to consumers adds value. The mechanics are that each stage charges VAT on their outputs (sales) but reclaims it on their inputs (purchases).

    So .... I buy a widget, add some features that turn it into a doodad and sell it. The widget I buy costs me £100, and that's what I pay my supplier. But that's actually £85.11 plus VAT. So I reclaim the £14.89.

    When I sell my doodad to you, I charge you £130, which is £110.64 plus VAT of £19.36.

    By my adding of features, I've "added" value, and that value is reflected by the price the market will bear, which is the ex-VAT price of the doodad less the ex-VAT price of the input widget. i.e. £110.64 - £85.11 = £25.53.

    The VAT I charge (£19.36) less the VAT I reclaim (£14.89) is £4.47.

    So the VAT at each stage is the "value added" at that stage, at the current VAT rate. If you add up the VAT at each stage, you end up with the amount finally paid by the person that can't reclaim the input VAT, which is the consumer.



    Right, that's the principle .... you pay VAT on each stage of the process of getting the goods to you.

    So why pay it on shipping? Because part of the process of you getting the goods is the process of getting them to you, so you pay VAT on it.

    If you go and collect the goods, then getting them to you is no longer part of the process, so you don't pay VAT on it.

    I I buy an item from the USA, I pay shipping to get it to me. If I then sell it to you, you pay the price I charge. You don;t necessarily realise it, but you're paying both the shipping costs I incurred, and the VAT on them. The difference is that you don't see it broken down like that. Now if you import directly from the USA< cutting me out, you still pay the VAT on it, the difference being that now you know you are.

    So think about it. Yu buyt a processor or HD from Scan. Where do Scan get it? From a wholesaler probably. Where does he get it? He probably imports, and he he pays both shipping costs and VAT on them when he does. So that VAT is part of Scan's input tax that they reclaim, and then charge again to you when they sell to you, because that's the way the VAT works ... a tax on the margins at each stage of getting the goods to the consumer, not just of making the goods.

    After all, you're not likely to buy a processor or HD, or a banana or a shirt, if it's then going to sit in a warehouse in Malaysia, because it won't do you much good there. Getting goods to you, i.e. shipping, and covering you for loss (i.e. insurance) and the packaging they come in, is all part of the process of getting goods to consumers, and so is VAT-able .... unless for social reasons, it's been exempted or zero-rated.

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