Tax on item posted from the U.S

sanfairyanne

A friend posted something from the U.S, it's only something small, a home made letter opener made of stone. He gave it a value of $25. I have yet to receive the item, it is due tomorrow but I have just received a note put through the door telling me that I will have to pay £21.86 in duty and brokerage charges. £10.36 is duty, the rest brokerage. This means I have to pay more in fees than the item is even valued at. Surely this isn't correct.
Many thanks in advance.

AnotherJoe

This https://transferwise.com/gb/import-duty/from-usa says if under £135 no charge.

Did he put that it was a gift?

Thrugelmir

Correct. There'll be a handling charge plus import duties on the postal cost not just the value of the item. If it's homemade why is it worth $25? 

sanfairyanne

I told him to say it was a gift but for some reason he's named it 'souvenir'.
I checked Transferwise and yes they also quote £135, so does the Government website. 
https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

If there's duty to be paid I'm confused because the government site clearly states nothing on goods under `£135

Thrugelmir, it was given a value purely because the paperwork asked for one, so the person who sent it just gave it that value. 

I believe I can question it via the government online form C285

sheramber

Is the charge for  VAT which is due on items over £15. As he dod not class it as a gift the £15 limit will apply.

You’ll be charged at the VAT rate that applies to your goods. VAT is charged on the total value, including:

• the price paid for the goods
• postage, packaging and insurance
• any duty you owe

chrisbur

sheramber said:

Is the charge for  VAT which is due on items over £15. As he dod not class it as a gift the £15 limit will apply.

You’ll be charged at the VAT rate that applies to your goods. VAT is charged on the total value, including:

• the price paid for the goods
• postage, packaging and insurance
• any duty you owe

There is also an added charge by the deliverer for collecting the VAT, it was £8 extra added by Royal Mail last time I had a delivery with VAT added.

Andy_L

sheramber said:

Is the charge for  VAT which is due on items over £15. As he dod not class it as a gift the £15 limit will apply.

You’ll be charged at the VAT rate that applies to your goods. VAT is charged on the total value, including:

• the price paid for the goods
• postage, packaging and insurance
• any duty you owe

10 quid does seem high for just vat though. Is there a breakdown of how they worked it out. Rhey might have cocked up the calculation and charged duty as well as vat

sanfairyanne

I managed to speak to the sender, they said they have put it down as a gift on the customs declaration, but they named the article a souvenir. It has yet to arrive, I am expecting it this morning. The breakdown on fees is:
Freight Import VAT £10.36. 

Brockerage Charges £11.50
I think HMRC are saying you pay VAT on items over £15 unless it's marked as a gift.

And you only pay Duty on items over £135 (I thought duty and VAT were the same)?

If it does say "Gift" on the customs declaration I shouldn't need to pay duty. I don't know what to do at that point because the guy delivering it will likely just claim ignorance. I might refuse it, I guess it will go to the depo' where I can later argue my case. Perhaps someone knows? 

I add the invoice here:

whizzywoo

A quick Google of $25 USD equals £19.08. Therefore there should be VAT charged 20% £3.82.
Plus Handling fee by Royal Mail presumably now gone up to £11.50.
BUT if the value of the item goes over £15 then the VAT is also charged on the shipping fees.  Do you know how much the postage was?  I do know that the cost of shipping international parcels in the US has gone up a lot recently.

It would break down as follows (I think) someone might like to check my Maths as I'm a bit rusty these days. 
VAT charge at 20% on £19 equals £3.80
Royal Mail Handling fee                £11.50
VAT charge on postage                   £6.56 ??? Does seem very high!  Would mean the USD cost of postage to be approx $43
                                                      ______
Total charge                                  £21.86
                                                      ______

It's not unknown for the VAT charge to be way out but you can't argue with Royal Mail about it.  You have to pay up and then take it up with HMRC VAT Customs Dept.  I used to have arguments with them all the time when I was importing small items from the States for my business.

Beenie

It's a nasty surprise and we have been caught in a similar way. An American friend handmade a small quilt for me, made from scraps of material (and not very nice it has to be said). She put an insurance value of $250 on it in casecit went missing, which means we got stuck with around £40 of duty/handling fees. Ouch.

whizzywoo

Beenie said:

It's a nasty surprise and we have been caught in a similar way. An American friend handmade a small quilt for me, made from scraps of material (and not very nice it has to be said). She put an insurance value of $250 on it in casecit went missing, which means we got stuck with around £40 of duty/handling fees. Ouch.

People in the States don't realise we have such a low threshold for VAT and duties on parcels coming into the UK.  Their threshold is very high, last time I looked it was about $500!  You can refuse to pay but then the parcel is sent back to the sender.  A bit difficult if it's a friend or family member. 

Just wait until next year when we come out of the EU.  If there is no deal this will be happening a lot more on every small item we buy from Europe as well.