Controlaccount / DHL demand import duty on personal birthday card and cookies

iZone

Hi everyone, I'm asking on behalf of my friend, an international student, who received a birthday card and homemade cookies from her family abroad several months ago, and is now receiving daily emails and phone calls from Controlaccount and DHL to pay ~£40 import duty and tax on it. Despite trying to explain her situation, Controlaccount are being difficult and insisting that she should pay.

Before registering here, I stumbled upon a few posts here about Controlaccount, but they all seem to be related to purchases or gifts above a certain price (I'm still posting this here but in case you think it should be a different subforum, feel free to move it there).

How is it possible that a birthday card and homemade cookies could be considered "goods" and worth ~£40 of tax? Is there any way to challenge, dispute or escalate this Should she simply ignore and/or try reaching out and complaining to someone more senior? 

It's not so much the amount of money that is the issue, but more the inefficiency, mistake or unfairness of whoever could decide that family wishes are a "good" requiring import duty. This is also disheartening amid other stories I've heard about international students being ripped off.

user1977

Is it purely tax/duty? Presumably there's an admin fee involved too. Do you know what the customs declaration on the package said?

sheramber

 The person who decided the charge is the customs officer.

What was declared on the customs slip for the package?

Gifts up to the value of £39 , including postage, do not pay VAT but that needs to be stated on the customs declaration. Oc=ver that amount charges apply.

The couriers do not set the customs charge. HMRC charge the amount and the courier pays it on behalf of the parcel recipient.

the alternative is the recipient goes and pays the customs charge themselves to collect the parcel.

The couriers fee for clearing customs and delivering will be included in the £40.

 details of charges are found here

https://www.gov.uk/goods-sent-from-abroad/tax-and-duty

iZone

Thanks for the quick replies. I'll double check regarding the questions, but meanwhile I'm just very surprised as to why a customs officer would value a birthday card and a handful of homemade biscuits as having any value at all... is it possible that they did a mistake?

MattMattMattUK

iZone said:

Thanks for the quick replies. I'll double check regarding the questions, but meanwhile I'm just very surprised as to why a customs officer would value a birthday card and a handful of homemade biscuits as having any value at all... is it possible that they did a mistake?

It is possible customs made a mistake, the bigger issue could be either a lack of, or incorrect declaration. As sheramber says above, this probably would have been covered by the low value gift exemption, but only if the declaration was made, rather than sending goods without the relevant customs documents. 

The birthday card would be classed as a document of no value. 
The cookies may be subject to duty, depending on their country of origin, as they are home made and if they were not given a value on the shipment then one would have been assumed based on a rough estimate (eg 0.5kg of chocolate chip cookies is valued at £5).
VAT is then charged on the total value of the shipment, for the purposes of calculating VAT the cost is Goods, Duty, Insurance and Freight, so if the freight cost was £20 then import VAT is also charged on that. Again, if no declaration was given then a higher estimate will have been made.
There is a customs brokerage and clearance fee, this ranges from £11.50-12.50 depending on the provider.
You might also find that the £40 now includes fees for late/non-payment.

user1977

Possible, yes, though it depends what they were declared as, which none of us currently knows.

In any event, whether or not your friend is entitled to a refund from HMRC is irrelevant to your friend first reimbursing DHL what they've already paid HMRC on your friend's behalf.

MarvinDay

MattMattMattUK said:

VAT is then charged on the total value of the shipment, for the purposes of calculating VAT the cost is Goods, Duty, Insurance and Freight, so if the freight cost was £20 then import VAT is also charged on that. Again, if no declaration was given then a higher estimate will have been made.

Postage/freight costs are only included for VAT calculations on gifts if an express delivery service is used. If it's a standard delivery service then the cost isn't taken into account.

https://www.gov.uk/government/publications/notice-143-a-guide-for-international-post-users/notice-143-a-guide-for-international-post-users

As with Customs Duty, the cost of postage is excluded from the calculation for VAT on gifts, except where the sender has used the Express Mail Service (EMS) as opposed to a standard mail service.

Manxman_in_exile

While it's possible that HMRC (or DHL) have made a mistake, it's probably more likely that whoever sent the gift to your friend failed to complete the customs declaration properly.  (If you look at the links referred to above you will see that they stress how important this is.  I suspect that people sending parcels etc to the UK often do not complete the declaration correctly.  This is probably well-intentioned but inadvertantly causes the recipient problems in the UK).

Your friend probably has little choice but to pay up, but if I were them I would certainly first be asking DHL for a breakdown of the charges and whether they know what was declared on the import forms.  (If it's already gone to ControlAccount, did your friend never receive an original invoice from DHL, or did they decide to ignore it?)

As others have said, it's unlikely to be DHL's fault and it isn't some sort of scam on foreign students.  If your friend can establish that HMRC has made a mistake (ie the customs declaration was correctly completed by the sender but HMRC assessed the charges wrongly) then they need to see if they can recover the DHL charges from HMRC.  (I'm sure I've seen another thread on here suggesting that and linking to a form on .gov.uk).  If the customs declaration was not completed correctly because the person sending it didn't appreciate what they were doing, I doubt a refund is possible.

If your friend is staying in the UK for some time, the moral is that while gifts from overseas will be welcome, they may also carry unnecessary import charges.  (Unnecessary in the sense of being avoidable if sent correctly).

molerat

Charges often come from a mistaken value - local currency being misread as GBP.  The problem is of course that they will likely no longer have the customs declaration.

sheramber

Customs wouldn't know it was cookiesMarvinDay said:

MattMattMattUK said:

VAT is then charged on the total value of the shipment, for the purposes of calculating VAT the cost is Goods, Duty, Insurance and Freight, so if the freight cost was £20 then import VAT is also charged on that. Again, if no declaration was given then a higher estimate will have been made.

Postage/freight costs are only included for VAT calculations on gifts if an express delivery service is used. If it's a standard delivery service then the cost isn't taken into account.

https://www.gov.uk/government/publications/notice-143-a-guide-for-international-post-users/notice-143-a-guide-for-international-post-users

As with Customs Duty, the cost of postage is excluded from the calculation for VAT on gifts, except where the sender has used the Express Mail Service (EMS) as opposed to a standard mail service.

 But did the customs declaration say it was a gift?

peteuk

Having been in a similar situation, where the decimal point was put in the wrong place, I was faced with a tax payment of over £200.   The item was opened and examined however they seem to ignore the invoice which puts the value correctly.  

The options for her are, as mine where,  to pay and claim or have the item returned.   I could not dispute the charge prior to collecting it.