VAT changes on Imports from Jan 1st 2021

[Richard Ibbotson]

I saw in Alex's conversation on Kicad reference to the £15 VAT exception. It is my understanding that this will cease from 1st January 2021. Have any members checked how this will impact buying from our favorite suppliers like JLC PCB and PCB Way? Also how it will impact orders via AliExpress or eBay sellers?

My understanding is that:

1) The existing £15 exception will be removed and all imports subject to VAT

2) The EU will now delay this change until 1stJuly 2021, but UK will not.

3) I will become possible for foreign suppliers to set up to pay the VAT upfront, but it not clear if the actually plan to do this. Should we ask JLC PCB and PCB Way?

4) The responsibility to pay the VAT may be shifted to the purchaser, but this will impact delivery times and invoke often excessive collection charges.

Is this correct? And does anyone have more accurate information?

I do support the payment of VAT on all imports, but also hope that this is taken as an opportunity to improve the process in terms of speed and charges.

Richard

[Alex Gibson]

Great, another way for the government to try to sabotage my business while handing my money to big corporations.

 

I also support the principle of paying VAT on imports, but it’s already too much when a £15.01 product ends up costing over £30 due to the ‘admin’ charge for the processing by ‘customs’ – monopolistic private companies with no consumer choice to drive down the costs.  Presumably this will also help to fund the massive extra customs work imposed by Brexit so there is no incentive to remove it, and I assume they’re positively happy to stop me sourcing small items direct from China.

 

End of rant, the damage will be long done before we next get a chance to vote.  I wish I could share your optimism about improvements to the process.

 

Cheers,

 

Alex Gibson

 

+44 7813 810 765    @alexgibson3d    37 Royal Avenue, Reading RG31 4UR

 

admg consulting

 

edumaker limited

 

·         Project management

·         Operations & Process improvement

·         3D Printing

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[Robert Pryde]

Check out https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

Mostly it appears to indicate that Consignments of less than £135 should have VAT collected at point of Sale and then won't be liable to import VAT and held up at the border.

Worth noting that a Consignment may be 1 or more boxes(parcels).

Rob

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[Mark Robson]

I'm not totally sure how it will work, but I already paid VAT on one order from JLCPCB, they have a system set up with some of their shipping companies to pre-pay VAT and duty, and add it to the amount you pay up front so there are no further customs delays or fees. This is definitely the best way of doing it, but it's not clear whether all suppliers / shipping methods will support it.

Also I read some of the UK government advice about this and it seems strongly to suggest that the supplier (or "OMP" - online marketplace) has the responsibility for setting it up correctly and remitting the UK government. I think it's highly unlikely that e.g. Aliexpress will set this up correctly in the month or so remaining.

This document was dated October this year, https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021?fbclid=IwAR0H0pVOhx0XOjwy8hYk7eLWxX8BCsf1wiyZrOC78tokVTy9Ol17QbE7BGE

So I think there is very little that the online marketplaces or other sellers are going to be ready, if they are not already completing VAT paperwork for the UK.

Mark

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[Tony Short]

Even Captain Kirk is affected!! https://twitter.com/WilliamShatner/status/1316887009198141441

Looks like we will have a double whammy, with that and EU firms not wanting to ship outside the EU (i.e. to us)

[Alex Gibson]

Thank you both for highlighting this information.

 

It seems to seek to extend a UK customs sphere of influence globally, and within this network of compliant traders, things can in theory function smoothly, perhaps even better than before.  The potential upside is to remove uncertainty and perhaps being stung for the admin fees greater than the product is worth.  But for a small business in the UK to buy an item direct from a small business in China, for example, seems fraught.  We’d have to either somehow encourage the remote seller to become affiliated to UK customs, or to co-operate with us in some form of pre-emptive compliance by displaying a VAT payment ID or similar…  I guess we have to hope that companies like AliExpress see it to their advantage to comply, and that will roll in many of the smallest traders.  Companies like PCBway may be much more marginal.  Hard to second-guess.

 

Will check in detail, thanks again.

 

Alex Gibson

 

+44 7813 810 765    @alexgibson3d    37 Royal Avenue, Reading RG31 4UR

 

admg consulting

 

edumaker limited

 

·         Project management

·         Operations & Process improvement

·         3D Printing

 

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[taraj...@gmail.com]

My understanding of the rules is that "trade samples" and gifts will be exempt from VAT and duty and therefore the admin fees that go with them?

I doubt there will be any further burdens the Border Force on goods coming from outside EU because the only change will be that the money now goes to the exchequer instead of to Brussels. The only change will be on goods coming from the EU unless of course there is a deal which I would say is highly likely.

[Gavin]

I agree with almost everything in this thread - I think people should pay VAT on imports and there should be a cheap, light-touch, proportionate approach for low-value consignments. I have sympathy with foreign traders who do not have the resources to investigate how to roll VAT into their prices and make the appropriate payments to our government.  I have less sympathy with the carriers who levy such high charges for putting parcels through customs - the first to realise that they could gain an advantage by tapering charges for low value items will surely increase their market share.

What to do about it? Well, now is probably a good time to petition the government.  Not via Change.org or the e-petitions site as these rarely gain traction and once they do, and some celebrity names have signed-up, are often dismissed as politician campaigning orchestrated by the opposition/some pressure group. Instead, write to your MP and ask them to raise it - relationships across the floor of the House are a lot more cordial than you would imagine from the media. Your letter will be forwarded to the appropriate minister for response as a piece of ‘ministerial correspondence’. Their office will pass it to the official in charge of this policy area for response in their name. If your letter is short, clear, persuasive and grabs the minister’s attention they will pay close attention to the response and you will have started the gears in motion. To manage expectations, first time you write, the reply will likely just contain a statement of current policy (unless they have something better planned). However if more people write, MPs, ministers and officials, who genuinely have the power to change things, will notice the pattern and if it appeals to their sense of how the world should work, and matches their priorities, they will champion change. I say this from direct experience of being on both ends of these exchanges, and also witnessing change as a result.

Things you might want to mention

- when you write to your MP include your name and address - they need to know that you are one their constituents to raise the matter

- state that you are a business, that you are engaged in a high-value add industry, why you buy from abroad and the impact current arrangements have on your profitability/viability

- include an illustration - item costs X, VAT due is Y, foreign-owned carrier, eg Deutsche Post, walks away with Z (which is often much bigger than Y)

- make a suggestion on how to solve it

Convince other people in the same situation to do the same. Repeat.

Gavin

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[Gavin]

Those people who live in the Reading West constituency have the Business Secretary as their MP.....

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From: Gavin <gavi...@gmail.com>
Sent: Saturday, December 5, 2020 2:06:49 PM
To: reading-...@googlegroups.com <reading-...@googlegroups.com>

[Richard Ibbotson]

On a couple of specifics, I did contact JLCPCB and they seem to be aware of the changes, are VAT registered, and will charge VAT. They were not clear on the exact process after Jan 1st however. I also hear that AliExpress as an online market place will charge VAT for goods to U.K. though again not clear how the goods will then sail through border controls with carriers.

I believe that a very similar process is already implemented and operational to collect Global Sales Tax for Australia, and the EU will implement the same VAT rules as U.K. from July 2021.

I also am willing to pay VAT and guess there will be tightening on the checks of good fraudulently labelled as gifts or samples. As the VAT is payable by the seller then I assume these goods could be confiscated rather than the recipient asked to pay.

There does appear to be quite a few shipping options from China to the U.K. these days, so

I am optimistic that we will get back to some stability later next year at reasonable rates. How Border Force and carriers react early in the year is hard to predict I think given their challenges.

Richard

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On 5 Dec 2020, at 14:17, Gavin <gavi...@gmail.com> wrote:



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[Mark Robson]

As I understand it, the UK government has some automated mechanism for overseas sellers to provide the value of the package, remit the VAT due, and print some kind of "customs pre-paid" label. For Aliexpress, that means making that label available to their sellers to print and stick on the package.

If it all works it would be fine, much better than the older process for stuff over £15, which could involve paying a big extra fee (e.g. paying VAT+£8 on a thing that's only worth £20 to begin with) and delay.

However, given the UK government's track record on IT integration and the short time they've left the sellers, I don't expect it to immediately work.

Some other countries already have a similar scheme, the EU also plans to introduce one (but 6 months later) I think. These systems are probably all roughly equivalent but different and incompatible.

Mark

Check out https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021

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[Richard Ibbotson]

I do hope that “U.K. government IT systems” are never involved in the carrier process, only in the VAT collection process. The existing and new carriers are competent to make checks and could operate with fairly light Border Force surveillance and audit.
There are now many more shipping options and I trust these will mature in response to the changes.

This is a good description of the AliExpress shipping options and it looks positive that it should be easy to manage the changes as they have a lot of control over the process.

https://alitools.io/en/blog/is-aliexpress-standard-shipping-reliable/

 Already I see a lot of my China packages bulk shipped to London and then posted from there.

Please everyone post your actual experiences here.

Richard

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On 5 Dec 2020, at 19:11, Mark Robson <mar...@gmail.com> wrote:



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[Mark Robson]

Yes, "Aliexpress standard shipping" is the one to have.

I've found Aliexpress standard to be really, really good, usually the stuff arrives in maybe, 10 days max even though they often quote "20-40 days".

Some sellers offer a cheaper method which really isn't worth it, it's very slow.

Mark

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[Gavin]

In October, I bought a £120 consignment of electronics from a seller on AliExpress. They were not offering an express delivery option but said they would offer delivery by a nominated carrier on request. I needed the parts urgently so emailed and requested FedEx and after a few days they sent a link to a new listing with the FedEx option. Delivery was ~£60, which seemed fair to me given the size and weight of the package. Arrived in a couple of days having sailed through customs. A week later FedEx invoiced me through the mail for VAT, which was pretty much exactly 20% of the value of the goods+delivery charge. I guess they had factored the customs handling charge into the price of delivery or perhaps just consider it easier / their job to do it. 

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