EU Customs/VAT anyone know how it will work?

[Shere Khan]

So I was wondering if we will now be paying customs and handling fee on good from the EU. I jus had a quick butchers but the Govt page is out of date. I see from the new missing parcels thread that we will now have to fill out a customs form when we send but does anyone know if our fancy new deal means the kind of things we buy- records- will attract charges and, worst of all, the dreaded 'handling charge' for the simple matter of collecting our VAT?

Confused of Beccles

[eine]

I am presuming that it's now like buying records from the ROTW.

The safest thing to do is to ask the seller to put a value of £15 or less on the customs slip.

Then you will be assured of not attracting a fee. You will miss out on funding our newly independent nation, though. ¯\_(ツ)_/¯

[vinylarchive]

https://www.superdeluxeedition.com/f...NAYW9sLmNvbSJ9

https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk

[Shere Khan]

https://www.superdeluxeedition.com/f...NAYW9sLmNvbSJ9

https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk

Had a quick look at that. Looks like it's currently a bit hit and miss. What a monumental pain.

[Viva Chiba]

Was reading up on this recently. Currently about as clear as a muddy puddle in a thick fog at the height of a solar eclipse. If purchasing from an international online marketplace (OMP), recent guidance suggests that that the marketplace should charge you VAT (currently 20 percent) on all purchases - when you buy the item/s - and pay this to HMRC after 1st Jan 2020.

If the item or total items in a consignment are less than 135 quid, they will accrue no further tax. If over 135 quid customs duty is also payable on them as well as the VAT.

Significantly, one big change is that there is no VAT exemption for items under 15 quid, meaning you will need to pay VAT on anything you buy from overseas, irrespective of its value.

The customs form declaration therefore becomes less relevant to the whole process, as VAT should be collected by the OMP when you buy an item, not by customs in the UK. Even if you paid 100 quid for it and the customs form said it cost you 5, 20 percent VAT should be charged when you paid for it.

In a limited number of instances, if you are buying something of low value this may be beneficial. Eg if you buy a 20 quid single from the USA, you might pay 4 quid in VAT. But you wouldn't be charged VAT and the horrendous customs 'handling charge' at this end anymore, I believe. However for higher value purchases this is going to significantly increase the cost of buying from overseas.

See link below. As usual the HMRC guidance is wishy washy and how the new tax applies will probably involve interpretation of their principles based guidance.

One of the key points raised in a recent discussion I was reading on Discogs is whether the site would qualify as an OMP. There are specific criteria which define an OMP, see below. Depending on how you interpret these, Discogs either qualifies as an OMP or not.

Discogs doesn't process payments - PayPal does - and doesn't set terms regarding delivery - that's handled by individual sellers I would argue. If HMRC accepts that then Discogs might be regarded as a site that merely 'advertises' or offers 'listings' - then they would not need to charge charge VAT.

Some aspects of their service already incur VAT however - as 20 percent VAT is already added to seller fees.
If they do consider themselves an OMP, I suspect the impact will be that if we buy from outside the UK, an additional 20 percent VAT tax charge will be applied to our orders at point of purchase. You may have noted that additional tax charges already apply to buyers from Australia or some US states, and that these are automatically added to their invoice when they place an order.

This seems to have caused confusion and anxiety as the OMP would need to register with HMRC, record transactions and have a mechanism for sending them the loot. Some recent impacts of this are that some firms are no longer selling to the UK, or others have perceived that prices of items sold to the UK in some sites have increased to cover the 20 percent VAT overhead.

This is not good news for Discogs sellers either, as it means that buyers could pay 20 percent extra via PayPal, PayPal will keep 5 percent of this as their usual fee, but the full 20 percent will be added to Discogs monthly fees and paid to HMRC. So the seller is slightly losing out.


What an online marketplace (OMP) is


We use the term OMP to describe any electronic interface (website or mobile application) such as a marketplace, platform, portal or similar that facilitates the sale of goods to customers. As well as facilitating supplies, operators of OMPs may also sell their own goods on the OMP, but where they do so they are treated for VAT purposes as a direct seller rather than an OMP.

HMRC’s definition of an online marketplace is a business using a website or mobile phone app (such as a marketplace, platform or portal) to handle the sale of goods to customers which meets all of the following conditions:

• in any way sets the terms and conditions on how goods are supplied to the customer
• is involved in any way in authorising or facilitating customers’ payments
• is involved in the ordering or delivery of the goods

A business which only provides one of the following will also not be regarded as an OMP:

a) the processing of payments in relation to the supply of goods
b) the listing or advertising of goods
c) the redirecting or transferring of customers to other electronic interfaces where goods are offered for sale, without any further intervention in the supply

[Shere Khan]

Thanks for that full overview of the situation. It seems to confirm what I had thought was the case, having read other bits here and there, which is If I buy from Europe they should add costs at their end and I shouldn't have to pay out at this end- at least that's what I think it's saying. I suppose I'll just have to buy something and see.

[Milesago]

How will customs distinguish pre-paid VAT packages from packages sent by private sellers containing goods not purchased on any recognised OMP, and paid for by, say, bank transfer?

[Ken Ward]

Just bought an ep from Italy £10 just to see. Post at £9 was a bit off though.
We wait with baited breath.

[Viva Chiba]

As you read through the blurb, it becomes ever more byzantine.

I'm not sure how HMRC would distinguish between a 'private' purchase and one from an OMP - I'm not sure they need to try, as the onus appears to be on the seller, in all cases, to register for and pay the appropriate VAT. If you buy from an OMP using Paypal or a credit card, or pay an individual 'privately' via bank transfer, it's the seller's responsibility to pay the VAT on the purchase. I'm assuming that they may need to complete the customs declaration to confirm that VAT has been paid in some way?

Perhaps one way HMRC could tell this is by asking the OMP / private seller to add their VAT registration number to the customs form - there is a specific space for this. Note that all OMPs have to register for VAT, according to the government blurb:

Who should register for VAT
OMPs must register for UK VAT in order to account for VAT on their deemed supplies, with effect from 1 January 2021.

You will also need to register if you sell goods directly (without using an OMP to facilitate your sales) to UK consumers and the goods are outside the UK at the point of sale. From 1 January 2021 the distance selling threshold for sales from EU member states will no longer apply. There is no VAT registration threshold for businesses established outside the UK so you will be required to register for VAT on any value of sales where you become liable for VAT under these new measures.

Note if you sell something to an Australian customer on Discogs, they will pay the Australian GST tax via Paypal / Discogs at point of sale. According to the Discogs guidance on this, the customs form needs to be completed in a certain fashion that says the GST has been paid.

Additionally direct sellers also need to register for VAT. This sounds like a bureaucratic nightmare, so I can understand why small sellers might have reservations about it and opt out....

Direct sellers - businesses making sales direct to GB customers rather than via an OMP
Businesses making sales of goods not exceeding £135 in value (per consignment) to customers in the UK, where the goods are outside the UK at the point of sale, will become liable to register and account for VAT on those sales. You can find more information on Overseas business selling goods in the UK.

However! Making this even more confusing is another head-scratching caveat. If you are a part time hobbyist, are you actually a 'business'? If not, then none of this actually applies to you after all! This might be a get-out clause that exempts infrequent occasional sellers.

Non-business sales
Sales made by persons who are not in business are outside the scope of these measures. This includes gifts and consignments sent from consumer to consumer. Guidance on whether an activity is a business activity or not for VAT purposes can be found in the Non-business manual

Can we have the customs union back now please?

[eine]

How will customs distinguish pre-paid VAT packages from packages sent by private sellers containing goods not purchased on any recognised OMP, and paid for by, say, bank transfer?

Presumably they will won't () or they will insist on sale notes in packages. I seem to remember Switzerland going through periods of doing this ().

[spiritual jazz mags]

Some Ebay listings from the EU are already indicating that 20% VAT will be added to the sale price.

I noticed this when I started watching an item that came up in saved search. I didn't bid in the end (the VAT was a bit off-putting) but when the item didn't sell I contacted the seller to enquire about a direct sale and the VAT thing. He's a very experienced Dutch seller, this is what he said:

As a result of Brexit VAT will automatically be calculated and charged by Ebay for items sold to Great Britain. Very unfortunate indeed!! Discogs will undoubtedy follow. Shipment fees to the UK have also increased quite a bit .

Not sure about Discogs, but it is certainly a threat to look out for as mentioned by others. Direct sales could be a workaround on there.

In about 6 months time when all the consequences of leaving the EU have begun to take effect, it will be interesting to see where public opinion lies on the matter!

[Viva Chiba]

I fear, in all earnestness, that the golden age of online international vynil retail may well be almost over. Going to be very tempting to stick to buying patriotic mod and freakbeat, rather than afro-funk, group sounds or chanson from afar due to the nefarious taxman.

On the plus side, I guess this will automatically increase the value of my exotic raers by 20 percent in the UK market!

Another interesting point to note is that in the summer, the EU is going to be introducing corresponding measures. Eg if you are in the EU and buy from outside the EU, you will also be subject to extra VAT and will need to pay it at point of purchase from an OMP etc. See link below. So this is a very widespread change, and not merely confined to the UK.

Presumably contacting sellers directly, arranging peer to peer purchases via forums and sending items as a 'gift' might be alternatives. Another might be to use some sort of third party like a friend who can receive items within the seller's nation (or the customs union) and forward them to you.

However large professional sellers will typically refuse to diverge from the regulations, and I suspect the global trade will invariably take an immediate hit when prices leap by a fifth. Perhaps some items may go down in price and accommodate the tax ultimately, but until that happens it's going to be very vexing looking at stuff appear on my Discogs wants list at inflated values.

It's the end of the online vinyl junkie experience as we knowed it.

And I don't feel fine.