VAT

the_lunatic_is_in_my_head

Sandtree said:

the_lunatic_is_in_my_head said:

Sandtree said:

Artnico said:

I bought something from Germany through an English website worth £350. When it was delivered the courier company charged me 20% VAT plus an extra charge. Is this correct? Thanks 

Assuming you dont live in Germany and you've asked for it to be delivered to the UK then absolutely; we are not in the EU and so you have to pay UK tax when you bring something into the UK. 

If they are doing things correctly they should have sold it net of the German equivalent of VAT (which is currently 16% or 19% depending on when the sale was) as it was being exported but small merchants etc are often not great at realising these things. 

The shops at airports used to want to see your boarding pass so they could determine whether you were leaving the EU. If you was then the goods would be zero rated, but you'd still pay the same price. 

I may be incorrect but I don't think there is any obligation to knock the VAT off when exporting, at least here in the UK.

On the basis that they are posting it to an overseas location there is no need to "see a boarding card" etc. They could choose to charge overseas customers outside the EU more on a net basis but I suspect this is rarer still than companies that charge VAT on export items or correctly not applying VAT.

There is no obligation to not charge VAT on goods sold for export as long as you pass the tax you say your charging to the vat man. The law says when you have to, if you want to generate additional tax for HMRC or equivalents they will never say no. Clearly issues occur when you state you are charging VAT but aren't then passing the monies to HMRC.

I understand there's no need for a boarding pass for onlines sales, it was just relevant to the airport comparison, what the retailer would need is proof of permanent export.

If the goods are zero rated then the VAT man gets zero, although the tax man gets more as the profit is higher.

Sandtree

the_lunatic_is_in_my_head said:
I understand there's no need for a boarding pass for onlines sales, it was just relevant to the airport comparison, what the retailer would need is proof of permanent export.

If the goods are zero rated then the VAT man gets zero, although the tax man gets more as the profit is higher.

Certainly in the UK you have to distinguish between zero rated and VAT exempt; there is a material difference in the treatment of recoverable VAT however if I remember correctly exported goods become zero rated rather than exempt.

The Tax Man only gets more if the seller increases the price to the gross price. As noted by NearlyOld most will simply not add sales tax to the net price and therefore their profit remains identical as they still get the £100 they would have even if they had charged £100 + VAT for a non-export sale. (Lets ignore the complexity of those on flat rated scheme)

the_lunatic_is_in_my_head

Sandtree said:

the_lunatic_is_in_my_head said:
I understand there's no need for a boarding pass for onlines sales, it was just relevant to the airport comparison, what the retailer would need is proof of permanent export.

If the goods are zero rated then the VAT man gets zero, although the tax man gets more as the profit is higher.

Certainly in the UK you have to distinguish between zero rated and VAT exempt; there is a material difference in the treatment of recoverable VAT however if I remember correctly exported goods become zero rated rather than exempt.

The Tax Man only gets more if the seller increases the price to the gross price. As noted by NearlyOld most will simply not add sales tax to the net price and therefore their profit remains identical as they still get the £100 they would have even if they had charged £100 + VAT for a non-export sale. (Lets ignore the complexity of those on flat rated scheme)

That's correct that some may not, I felt it important to raise the point to highlight that, from my understanding, the retailer isn't obligated to ensure the OP benefits from the German price minus 16/19% VAT. 

Use of the word correctly in the previous post I quoted would suggest the retailer is acting incorrectly if they didn't reduce the price when exporting outside their VAT area. 

Sandtree

the_lunatic_is_in_my_head said:
Use of the word correctly in the previous post I quoted would suggest the retailer is acting incorrectly if they didn't reduce the price when exporting outside their VAT area. 

Obviously a UK view but look at the governments own wording on Goods exported from the UK from 1 January 2021 (VAT Notice 703) - GOV.UK (www.gov.uk)

When goods are exported they are ‘consumed’ outside the UK and to impose VAT on such goods would be contrary to the purpose of the tax. Therefore, the supply of exported goods is zero-rated provided the conditions in this notice are met.

So even though it'd be more money in HMRC's coffers they even discourage the application of 20% VAT on export goods even if it'd be legal to do so (if the monies are then passed to HMRC)

Saying an item sold in Germany for EU delivery is £100 + 19% (£119) or for outside EU delivery is £119 + 0% is legal but is by far the minority of vendors approaches. 

the_lunatic_is_in_my_head

Sandtree said:

the_lunatic_is_in_my_head said:
Use of the word correctly in the previous post I quoted would suggest the retailer is acting incorrectly if they didn't reduce the price when exporting outside their VAT area. 

Saying an item sold in Germany for EU delivery is £100 + 19% (£119) or for outside EU delivery is £119 + 0% is legal 

Is the only point I wish to make to balance the advice already given. 

bris

It's pretty simple really. goods over £135 then the courier bills you for the VAT. Goods under £135 then the vendor charges you the VAT at the time of sale then they pay it to the UK VAT man. 

EU sellers must now register for UK VAT if they want to sell to the UK.

Sandtree

bris said:

It's pretty simple really. goods over £135 then the courier bills you for the VAT. Goods under £135 then the vendor charges you the VAT at the time of sale then they pay it to the UK VAT man. 

EU sellers must now register for UK VAT if they want to sell to the UK.

So I run a small gift shop in Italy, or egypt for that matter as the rules are not EU specific, a person emails me and says they remember seeing a nice little ornament in my shop when they were visiting over summer... can they buy one and post it to them. We agree a price of £100 all in and I send it knowing nothing about these new UK rules.... what happens?

the_lunatic_is_in_my_head

Sandtree said:

bris said:

It's pretty simple really. goods over £135 then the courier bills you for the VAT. Goods under £135 then the vendor charges you the VAT at the time of sale then they pay it to the UK VAT man. 

EU sellers must now register for UK VAT if they want to sell to the UK.

So I run a small gift shop in Italy, or egypt for that matter as the rules are not EU specific, a person emails me and says they remember seeing a nice little ornament in my shop when they were visiting over summer... can they buy one and post it to them. We agree a price of £100 all in and I send it knowing nothing about these new UK rules.... what happens?

The loss in revenue is probably too small to worry about covering the eventuality as the cost of collecting will outweigh the tax.

Sandtree

the_lunatic_is_in_my_head said:
The loss in revenue is probably too small to worry about covering the eventuality as the cost of collecting will outweigh the tax.

So you think large corporations which have to consider long term relationships and PR will register and collect the VAT and for almost everyone else they'll just be sending stuff UK VAT free as either they don't read the British press so have no idea of the changes or the hassle of registering, returns etc is too much of a pain and lacks enforceability to make the minority that do know about it take action. 

the_lunatic_is_in_my_head

Sandtree said:

the_lunatic_is_in_my_head said:
The loss in revenue is probably too small to worry about covering the eventuality as the cost of collecting will outweigh the tax.

So you think large corporations which have to consider long term relationships and PR will register and collect the VAT and for almost everyone else they'll just be sending stuff UK VAT free as either they don't read the British press so have no idea of the changes or the hassle of registering, returns etc is too much of a pain and lacks enforceability to make the minority that do know about it take action. 

You mentioned a small shop taking a one off order over the phone which doesn't cover everyone else.

Marketplaces are collecting the VAT, including those outside the UK like Aliexpress, what's left is mainly independent websites and I'd imagine the gaps will slowly be closed. Perhaps service providers such as Shopify will have to ensure their users comply. 

These taxes apply to places like Norway, Australia and US states so it's not just the UK requiring this (although what the requirements are in other places I don't know).

If you look around there are plenty of websites selling stuff they shouldn't (like knock off goods, even big ones like Wish have some very questionable listings for branded stuff at very low prices), 100% compliance would require 100% authority, as with most things likelihood is it will be balanced so the majority comply.