Ebay and VAT on "imports"?

Buster_Danog

Just wondering if anyone knows the legal basis on which ebay can charge VAT for an import on a purchase just because the seller has their address registered as being overseas even when the item is sent from within the UK??

I had this problem with a purchase I made, and ebay have told me that their terms and conditions are compliant with UK law. Their method of applying VAT on "imports" seems to be a very basic one as they are doing it based on the address the account is registered to and not where the parcel was sent from. I guess that is the easiest way for them, but when I tried to query it with customer services I was initially told I could get a VAT refund, but a few weeks later was told the opposite. They have said that I was informed by the website I would be charged, and their terms and conditions have been amended to make people aware.

Spoonie_Turtle

Often overseas sellers had stock stored in the UK or EU to avoid having to pay VAT (I can't remember exactly how it worked).  So now, the VAT is paid regardless of whether the sellers selling via online marketplaces are registered with HMRC or not.  If the seller is registered and has a VAT number then it's included and accounted for in the initial price (and the seller pays it to HMRC), whereas if they are not then eBay (or other online marketplace) collects the VAT and pays it to HMRC.

The same will apply within the EU to businesses registered outside the EU from July.

the_lunatic_is_in_my_head

Buster_Danog said:

Just wondering if anyone knows the legal basis on which ebay can charge VAT for an import on a purchase just because the seller has their address registered as being overseas even when the item is sent from within the UK??

I had this problem with a purchase I made, and ebay have told me that their terms and conditions are compliant with UK law. Their method of applying VAT on "imports" seems to be a very basic one as they are doing it based on the address the account is registered to and not where the parcel was sent from. I guess that is the easiest way for them, but when I tried to query it with customer services I was initially told I could get a VAT refund, but a few weeks later was told the opposite. They have said that I was informed by the website I would be charged, and their terms and conditions have been amended to make people aware.

The way VAT is charged on imports has changed since the 1st of Jan and this is how it works now, for goods under £135 the VAT is to be collected by the retailer, HMRC have agreed with (or forced?) marketplaces to collect the VAT which makes sense.

eBay, Amazon, Etsy, etc are legally bound to collect the VAT on sub £135 where the goods within the UK but the seller is not. 

Before the 1st of Jan a seller outside the EU with stock in the UK would have had to be VAT registered so you'd pay no extra ay way just eBay collects it now to ensure it's paid. 

Where you may lose out is buying from EU sellers who are under their country's VAT threshold.  

Spoonie_Turtle

the_lunatic_is_in_my_head said: 

Where you may lose out is buying from EU sellers who are under their country's VAT threshold.  

How so?  We are no longer in the EU and have to pay import VAT for things from EU sellers too.

the_lunatic_is_in_my_head

Spoonie_Turtle said:

the_lunatic_is_in_my_head said: 

Where you may lose out is buying from EU sellers who are under their country's VAT threshold.  

How so?  We are no longer in the EU and have to pay import VAT for things from EU sellers too.

Sorry, my post wasn’t worded well, you would lose out now having to pay VAT on a sale with an EU seller under their country’s threshold where as before the 1st of Jan you wouldn’t have had to. 

I.e it’s one situation where the UK consumer is paying more under the current way of VAT being applied, but otherwise I think it’s all equal. 

Spoonie_Turtle

the_lunatic_is_in_my_head said:

Spoonie_Turtle said:

the_lunatic_is_in_my_head said: 

Where you may lose out is buying from EU sellers who are under their country's VAT threshold.  

How so?  We are no longer in the EU and have to pay import VAT for things from EU sellers too.

Sorry, my post wasn’t worded well, you would lose out now having to pay VAT on a sale with an EU seller under their country’s threshold where as before the 1st of Jan you wouldn’t have had to. 

I.e it’s one situation where the UK consumer is paying more under the current way of VAT being applied, but otherwise I think it’s all equal. 

True, although the reason for that being the transition out of the EU ended, not solely because of the wider import VAT changes. 

So had everything import VAT-wise stayed the same, we would now be having to pay import VAT on items from the EU over £15, plus the postal/courier handling charge on top.  The two changes came in together (VAT on items from the EU, plus the abolition of the £15 LVCR and associated change of who collects the VAT to pay HMRC).

bris

Chinese sellers often ship from the UK for a quick delivery. They do this by having huge warehouses in the UK where they export the goods to, this means they clear customs this end, the duty and VAT is already paid. This means to us there should be no duty or VAT to pay so the Ebay system is wrong. 
Ebay have a system that obviously can't differentiate from their registered business and the shipping location, which means the VAT man is getting paid twice.

Having said that though I ordered a Drone from a Chinese seller, shipping from the UK where I wasn't charged VAT on top. So is it just some Chinese sellers not set up properly on Ebay? Maybe give the seller a message and ask.  

the_lunatic_is_in_my_head

bris said:

Chinese sellers often ship from the UK for a quick delivery. They do this by having huge warehouses in the UK where they export the goods to, this means they clear customs this end, the duty and VAT is already paid. This means to us there should be no duty or VAT to pay so the Ebay system is wrong. 
Ebay have a system that obviously can't differentiate from their registered business and the shipping location, which means the VAT man is getting paid twice.

Having said that though I ordered a Drone from a Chinese seller, shipping from the UK where I wasn't charged VAT on top. So is it just some Chinese sellers not set up properly on Ebay? Maybe give the seller a message and ask.  

If a UK VAT registered business imports goods they will pay VAT when it enters the UK, reclaim it and then pay it again when it sells. 

How this works with sellers outside the UK who knows but eBay's way of collecting VAT is correct:

www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces

From 11pm on 31 December 2020, consignments of goods with a value of £135 or less that are outside:

• the UK and sold through an online marketplace to customers in Great Britain (England, Scotland and Wales) will have UK supply VAT charged at the point of sale

Where those goods are sold through an online marketplace, the online marketplace will be liable for the VAT

Online marketplaces will also be liable for the VAT on goods of any value that are located in the UK at the point of sale and sold by an overseas business through an online marketplace.

Buster_Danog

Wow, a lot of detailed replies there. It is frying my brain. The complication here is that I bought the item from a private seller. The guy had been living in the UK and I believe he still had a place here but had at some point stayed in the US for a while so had changed his registered address to the US. It was a used item I bought that was then posted from within the UK.

The ebay customer service rep was talking to me with hypotheticals based on business sellers and drop shipping to justify charging me the VAT. The conversation became absurd when I pinned the customer service rep down to acknowledging the seller was a private seller who had changed his registration address. At that point he suggested the item I bought could have been brought into the UK by that private seller at some point from another country, but of course that would be nothing to do with ebay if it was bought privately and used by the seller.

soolin

I’m completely out of depth with the new rules but why does the status of the seller matter ? HMRC don’t differentiate between private and business sellers for import VAT and duty?

Spoonie_Turtle

Buster_Danog said:

Wow, a lot of detailed replies there. It is frying my brain. The complication here is that I bought the item from a private seller. The guy had been living in the UK and I believe he still had a place here but had at some point stayed in the US for a while so had changed his registered address to the US. It was a used item I bought that was then posted from within the UK.

Oh that is a very unusual complication!  Oh dear.  I completely see your point now.  eBay is evidently not set up to handle it simply because it is very rare - I have not heard of a private seller having items to sell in another country, the only plausible scenario I can think is if they have moved and are having someone else sell things they had to leave behind, or if they're selling off a decreased relative's items and have temporarily returned to the country to do so. 

I don't know what the answer is, because for items that come into the UK, bought from private sellers, the buyer still has to pay import VAT.  In theory if they were to relax the system slightly to account for these rare instances, then companies with stock in the UK could perhaps exploit that and register as a private seller on eBay, and we all know eBay are not good at cracking down on businesses pretending to be private sellers.