Royal Mail £8 Internal Post Handling Fee scam?

Wayward_Son

There seems to be a common misconception around the value of imports where import VAT and Duty are applied.

There are THREE types of Import Taxes levied by HMRC on imports into the UK;

The first is Excise Duty which is only applied to Alcohol, Tobacco, Perfume & Toilet Water in addition to the other two types. This is payable on ALL imports from ANYWHERE outside the UK, (including EU).

The second is Import VAT - The CORRECT figure (as of 2014) for Import VAT becoming applicable is £15 (not the £18 that seems to be frequently bandied about - check the HMRC website if you don't believe me - it used to be £18 but is not any more so watch out if you're using the old figure)! Import VAT is charged at the standard UK rate applicable at the time, currently 20%. (EU imports are exempt from Import VAT). This is the MAIN Import Tax that will effect most people!

It is important to note that Import VAT is applied to the TOTAL Value of the order as stated on the Customs Declaration, INCLUDING the Postage/Shipping Cost! When working out if your order will be under the £15 Threshold where VAT becomes applicable add the item value and the shipping charge together and work out the currecny conversion using VISA's Exchange Rate Calculator, (but remember that the Customs value is calculated at the time of import and the rate varies so if it's just under that could change in a few days and be just over).

The Third is Import Duty, which is ON TOP of VAT but only applied to orders where the total value EXCEEDS £135 and not applicable to goods from within the EU. The rate of Import Duty is specific to the item you are importing as different types of good attract different rates of Duty and there are many catagories and sub catagories known as Commodity Codes, (around 14,000). Commodity Code Import Duty rates can also vary depending on the Country you are importing the goods from! It is important that the sender of the goods correctly describes the item exactly as slight errors can lead to higher charges, (for instance just putting 'Guitar' could lead to an overcharge of 0.5% as an acoustic or electro/acoustic guitar should attract a rate of 3.2% but a purely electric guitar 3.7%)*. The rates are typically between 3%-9% but can vary from 0% to a maximum of 85% so it is worth phoning HMRC and checking before importing items over £135 in value if you are not sure! (HMRC waive Import Duty if the total of it is less than £9 but you STILL have to pay the VAT, whic is often the largest proportion anyway)!

*If I am importing and paying the duty myself I always take the trouble to get the correct commodity code and make sure the sender writes exactly the correct description and code onto the Customs Declaration and import paperwork).

Always remember that unless you have paid in advance for Customs Clearance you are also likely to be charged a Handling Fee by the Courier on top of the Import Charges to HMRC, for instance the often bemoaned £8 Charge applied by Royal Mail for collecting Customs Charges, (one Courier I could mention charges £25 per time). (See my other post on how to avoid this if buying from USA on Amazon or eBay). The set £8 flat fee is an easy way for RM to collect payment for their calculation, handling and payment of the fees on behalf of HMRC but often appears excessive when worked out on lower value items, especially by people who haven't worked out the exchange rates and didn't expect any fees at all. The way to look it is that it costs RM the same amount of time, effort and therefore cost to calculate, process and pay the Inport Duty on a £20 CD as it does on a £3000 Violin! The KEY to buying from outside the EU is to know the rates and work out the charges BEFORE you buy so you know EXACTLY what to expect; that £40 Bluray that you think only works out as £20 when imported from the USA doesn't work out as quite such a bargain when you've added the £5 Shipping, additional £5 for 20% VAT and £8 Royal Mail handling Fee, (not to mention the Currency Conversion Rate charged by Paypal (3%+ depending on currency), your Bank or Credit Card Provider - which also vary widely but usually are in the region of 1-4%)! ALWAYS check in advance, often the saving after all the fees and charges is not anywhere near as much as a lot of people think it will be!!!

I begrudge paying Royal Mail £8 plus the Taxes per imported parcel over £15 in total value so I avoid it whenever I can, but the REAL scandal is that the Import VAT Threshold that used to be £18 went DOWN to £15 when in reality it ought to have gone up with inflation to maintain it's real time buying value! It was £18 for years and years without an increase before it dropped to £15 so the REAL value of what it can get you is WAY LESS than it once was! If you want to complain about something complain about THAT bacuase if that had raised in line with inflation is would be worth over £30 now so the amount of parcels incurring Import Tax would be a lot less and not so many people would be having to pay Royal Mail their £8 handling fee! We should all write to our MP's to complain and when all of the political candidates come round in May 2015, (no matter what colour rosette they happen to be wearing), make it clear to them that you think the threshold should be raised, (though if they don;t get that money they'll have to make it up though some other tax)!

GIFTS - If the item is a Commercial Transaction, (ie bought and paid for over the internet whether by you or anyone else, OR an item that has been purchased commercially at all on your behalf then sent to you), it is NOT classed as a genuine gift by HMRC for import purposes and is SUBJECT to Import VAT, Excise Duty & Import Duty the same as all other orders! It doesn't matter if the seller falsely marks it as a gift it is still a commercial transaction and subject to duty. For instance; if a relative is a county outside the EU orders a DVD from Amazon in their country to be sent directly as a Gift to you in the UK it is a commercial transaction and subject to the same duty as if you'd ordered and paid for it yourself. If that person orders the DVD to be delivered to them but then wraps it up and sends it marked as a gift it is still possibly going to be classed as a commercial transaction and subject to import charges! It is a common misconception that you can get around import VAT and Duty simply by getting the sender to mark/declare the item as a gift, this is wrong! To qualify as a Gift HMRC state it must be sent by a privat individual and "there must be no commercial transaction or trade element involved and it must not have been paid for by the recipient either directly or indirectly", which pretty much excludes all items that are sent by a business or looks like it has been bought in a shop or bought online or traded! (If Granny in Australia has knitted you a jumper for Christmas that is obviously home made then that IS a gift and would be exempt from import duties but if it's brand new and got a shop label in you may have to pay if it's valued at over the £15 VAT Threshold and they class it as commercial goods)! The main thing to realise is that just marking an item as a gift does not automatically make it one!

LUCK; Occasionally you'll get lucky and an item that should have attracted duty will get through without any being applied but DON'T rely on it!

I hope that all helps and clears up the wrong but often quoted £18 VAT threshold once and for all! The CORRECT value at which Import VAT becomes payable is £15.

gik

Wayward_Son wrote: »

There seems to be a common misconception around the value of imports where import VAT and Duty are applied.

....I don't think there is.

trukdiver

Wayward_Son wrote: »

There seems to be a common misconception around the value of imports where import VAT and Duty are applied.

One thing you forgot to mention - books are VAT exempt whatever the value.

George_Michael

Wayward_Son wrote: »

The CORRECT value at which Import VAT becomes payable is £15.

Unless of course the goods have been purchased from someone in the Channel Islands in which case there is no minimum price before VAT becomes due.

Wayward_Son wrote: »

Import VAT is charged at the standard UK rate applicable at the time, currently 20%.

Again, not quite correct.
VAT will be charged at the applicable rate for the goods in question. Whilst this will usually be 20%, there are some goods that have a reduced rate of 5% and as trukdiver mentioned, some goods are exempt from VAT completely.

Louie3legs

I have also just been done with this scam.I ordered an item from USA for £30 and £10 post.I have just had to pay £6.10 customs charge which I expected and then also got hit with the Royal Mail £8 handling charge total £14.10 extra.When I questioned this at the depot, I got told this was because the post paid has been insufficent. After further enquiries I now find it is a handling fee for collecting the customs charge.( even the Royal Mail employees do not know this )
I find it very strange that an added charge by the Royal Mail can exceed the VAT charge set by the Government.
Maybe it should be up to the Government to sort this out as they keep harping on about International trade being good for the country.
The current system punishes you for doing so and I for one, will not be doing so again.

Exile_geordie

I take it you haven't read the thread at all then.


It is not a scam.

custardy

Louie3legs wrote: »

I have also just been done with this scam.I ordered an item from USA for £30 and £10 post.I have just had to pay £6.10 customs charge which I expected and then also got hit with the Royal Mail £8 handling charge total £14.10 extra.When I questioned this at the depot, I got told this was because the post paid has been insufficent. After further enquiries I now find it is a handling fee for collecting the customs charge.( even the Royal Mail employees do not know this )
I find it very strange that an added charge by the Royal Mail can exceed the VAT charge set by the Government.
Maybe it should be up to the Government to sort this out as they keep harping on about International trade being good for the country.
The current system punishes you for doing so and I for one, will not be doing so again.

Did you expect Santa to sort that out for you?

tealady

Wayward_Son wrote: »

I buy a lot of stuff from the USA and I never get stung for the £8 Royal Mail Fee.

On Amazon.com they have three International Shipping Options. The standard is cheapest but is not tracked and does not include Customs Clearance or duty so you end up paying duty and RM's £8 Fee on top. For items likely to be over the £15 threshold for paying Import VAT I always select the middle speed/cost AmazonGlobal Expedited Shipping (averages 8-14 business days) which as well as being faster and tracked also INCLUDES Customs clearance AND duty! It always works out cheaper than paying Royal Mail their £8 fee on top of the actual duty PLUS it's quicker as no delays while they hold your item, count up the fees on their abacus and send you a card!

Thanks for the tip, I was looking to buy something from the USA and was wondering what was the best way to keep charges to a minimum. I will note that down as I am liable to forget!!!:j:j:j

Money-Saving-King

Louie3legs wrote: »

Maybe it should be up to the Government to sort this out as they keep harping on about International trade being good for the country.

Aren't they more keen us manufacturing then exporting things though? As it brings the UK money.

And 2 threads on the front page of this part of the forum incorrectly using the word scam.

nightster

custardy wrote: »

Did you expect Santa to sort that out for you?

What an idiotic and ridiculous comment to make to this person. If you have nothing sensible or constructive to say Its best not to say it at all. The complaint about this charge (TAX) is justified in that the Royal Mail collect the duties on behalf of HM government therefore they should be paying the Royal mail for collecting this charge (TAX) not the new owner they are already paying the duty. If this was justified then every item we purchase from shops or retailers where duty should be paid then they should also be charging us £8 on each transaction. (I can only imagine the horrendous scenario where I go into a shoe shop and buy a pair of shoes for £50 plus £10 VAT and £8 to the shop for collecting the tax how ridiculous would this be. Or if george osbornes pasty tax had went through £1 for a hot sausage roll 20p VAT and £8 for collecting the 20p - £9.20 just brilliant.
Also Royal Mails argument their contract is with the sender is not true it is in fact with the person who pays for the delivery which is almost always the owner of the item who is the person who paid the seller for the item and also for the postage and is now the owner even though they have not yet received it. i.e. The seller is no longer the owner of the item and did not pay to send it, so the royal mail have no right to return it to the seller as the seller no longer owns it.
As for the import export trade comments it is difficult to manufacture genuine 50 year old second hand parts. Lets see what happens when the Royal Mail is fully privatised.
I hope all this is clear to you custardy.