Got sent Amazon USA gift cards for Xmas, UK Customs charged VAT on gift

Robofw9

Hi all, not posted for a while so hope this is best place for this query.

We have many US relatives. They are very generous and like to send us gifts. Often Amazon USA gift cards. We've explained these don't work on Amazon UK. But seems churlish to complain about such well-meant gifts & we can usually get something on Amazon USA (often gifts for other American relatives!)

But this year for the first time Customs took an interest, charging us £8 VAT on $75 of gift cards. Royal Mail then charged £12 handling fee on top.

I want to challenge this if possible so:

- is HMRC correct to charge VAT on US gift cards?
- how do I prove cards were for more than one person? There's a personal allowance on gifts.
- any point trying to recover the Royal Mail charge?

Any help welcome, the HMRC docs are not v clear.

Seasons greetings.

Jon_01

How was it listed on the customs form and what value was declared?

shaun_from_Africa

The limit for gifts is £34 per person and above this figure, VAT will be charged (as well as the handling fee).
Gifts for different people can be combined in one package but they must be itemised separately on the customs declaration and must be separately wrapped within the outer package.

If these requirements were not followed then your chances of successfully appealing the charge are going to be very slim.

timbstoke

While Shaun is right about the limits, presumably Customs will also want their pound of flesh from whatever goods they're spent on if they're coming from amazon.com. It seems absurd that they would be able to charge import duty and VAT twice.

I'm not sure what the answer is, but I'd suggest your relatives send you email based vouchers next year.

shaun_from_Africa

Reading the post from timbstoke got me thinking and after doing a bit of a search on Google, I would now say that you should appeal the VAT charge.

VAT on imports is charged at the same rate as it would be charged on the goods if sold in the country of import and it appears to be the case that vouchers such as gift cards are VAT exempt due to the fact that VAT will be accounted for on the selling price of the goods obtained by using the voucher.

As timbstoke pointed out, although VAT wouldn't be charged on the initial sale from Amazon.com, the goods would be liable for this tax if they were brought into the UK.

Section 8.6 of this webpage:
https://www.gov.uk/government/publications/vat-notice-7007-business-promotions/vat-notice-7007-business-promotions
deals with VAT on "retailer vouchers" which is what a gift card is and it states that these cards in the UK are generally zero rated for VAT.
Even though the OP's cards were purchased in the USA, I would say that they should still be zero rated when bringing them into the UK.

colin79666

Next time perhaps your relatives could send an e-Gift voucher instead

unforeseen

If HMRC considered them SPV (single purpose voucher) cards then VAT will be payable

One of the conditions of an SPV card is that it can only be used at one location.

shaun_from_Africa

But another requirement for the voucher to qualify as a SPV is that the VAT for the goods or services that will be supplied by redeeming that voucher must be known at the time the voucher was originally sold.
This wouldn't be the case with gift cards that can be used to purchase a variety of goods as those goods could well fall into a reduced or zero VAT class.

unforeseen

In that case maybe it's a simple case of HMRC classing it as a gift >£34 so attracting VAT. I'm not sure that HMRC go to the trouble of investigating the content in depth to drive code zero,exempt or standard rate but purely gift.

Robofw9

Thanks for all the useful posts!

Customs label said 'Gift cards - $75'. Cards were separately packed but in one package & not itemised separately on the label.

Yes, I'm talking to the Americans, trying to deter any further such cards. But has to be done tactfully: widespread belief is Amazon cards somehow cross all boundaries.

Since they're are Amazon.com (USA) dollar cards can only be spent via Amazon.com. No VAT charged, but anything posted into UK then attracts VAT/duty at that time.

Robofw9

Hi all,
There were two cards, $50 for partner/self & $25 for son. In separate folders but not separately detailed on customs form so probably no go.
Am appealing on basis Amazon UK gift cards attract no VAT so US ones should be treated the same.
Only 3 lines allowed for appeal details!
Will let you know result.
Happy New Year!