I have been ordering a few PCBs from China lately.
Choice of shipper...
The first thing is that JLCPCB offer a choice of shipper, and some options. The main one is pre-paid duty/taxes, or paid on receipt.
The pre-paid seems like an obvious choice, but there is a catch. The pre-paid adds more than just the UK VAT 20%, more like 25%, and, importantly, does not give a VAT INVOICE, so we cannot reclaim it. So pre-paid is basically 25% more expensive!
So post paid. And that works.
Importing and VAT
Things clearly have changed a bit, and it depends on all sorts of things, but most of my deliveries have simply "arrived" and that is it.
This is good! This is almost scary - no VAT to pay or claim. It is right, financially, as a business, any VAT we pay on import we would reclaim, just like buying anything else with VAT for the business use.
Reading more on this, it seems some couriers are sensible working with HMRC, and we gave JLCPCB a VAT number, and magically that all works out. Essentially it cancels out.
But there seem to be thresholds and things, and on at least on occasion I had a demand for VAT from courier. They sent that before it even got to customs and I paid, and no delay, which is good. The nice thing is I got a proper VAT invoice, and so could reclaim it. The annoying thing is the £5 admin fee they charge.
But mostly stuff arrives and no VAT. Yay!
But it seems there is also the possibility of "duty" on an import, and I don't think I can reclaim that.
This depends on product you have shipped, and I have learned my mistake here.
Mostly these PCBs are very much "development" boards. They are general purpose boards with a processor. But I made the mistake of marking one as "heating" because it would, but default, be used to control an air-con unit.
It seems that attracts a duty of 2% somehow. And the bill came later, long after delivery, with the extra £5 charge.
So did I categorise it wrongly? I think so - all of these boards are general purpose dev boards which seems to have no duty. I don't make it a "heating" board until it gets here and I load code. So I won't make that mistake again.
My big gripes is admin fees, even if £5, from couriers. They are paid to get the parcel to me and that involves a lot of costs and admin, all of which are very predictable.
But if there is duty or VAT they need the recipient to pay that - which is fine, and I can do that.
But they charge a £5, or similar, fee for handling that. They really don't need to, it is all automated, or could be, and HMRC Direct Debit them at the end of the month. The only admin/cost they have is if someone queries, and really, the query, in my case, is because of the admin fee itself, so shooting themselves in the foot here.
The problem is that I don't think the admin fee is a legally enforceable charge. They usually get away with it because they will not deliver until you pay, but sometimes they do, and chase you later.
What is the legality of this?
Firstly I am not a lawyer, but my feeling is that if this was a simple legal and legitimate charge the conversations with the likes of DHL would be a lot simpler. They are not. They were not with FedEx either.
For a start: Royal Mail have legislation to allow them to charge an admin fee. That alone tells me that there is no a legal basis for non Royal Mail - else they would not need a special law to make it legal.
I queried with DHL.
You agreed the charges.
The first argument was I agreed the charges, and the reason is that terms DHL have with the seller include a clause that: "When ordering DHL's services you, as "Shipper", are agreeing, on your behalf and on behalf of the consignee of the Shipment ("Consignee") and anyone else with an interest in the Shipment that these Terms and Conditions shall apply." And further in 'Section 5: Shipment Charges, Duties and Fees.'"
This is a hell of a stretch - why would any shipper agree to that, as they don't have authority to act as an agent for their customer to agree a contract with DHL on their behalf. I mean they could try that in their terms (and I don't believe they do), but no way that will work with most customers. Agreeing a contract as an agent is huge!. It could mean agreeing anything. I mean what if DHL's admin fee was £1,000,000? Agreed on behalf of the recipient? No customer will hand the seller authority to bind them to some unseen contract terms. And worse, the "anyone else with an interest in the Shipment" as that is not even their customer. No way that gets close to legal, in my view. And if the customer as a "consumer" that falls foul of a lot of consumer protection laws.
I pushed this, and pushed this, and stated I did not believe I had given the seller any authority to act as my agent to agree a contract with DHL.
Finally I get: "I am not advising that you have entered a contract with DHL." - yay! Huge win there.
The fee is for HMRC?
I then ask, if not contractual, what the legal bases is, and eventually get the rather oddly worded: "The legal basis is that the charges is supplied from HMRC."
Well the "duty" is, and I paid that (it was £5.09). But the extra charge is clearly not for HMRC, it is "DHL's deferment fee".
They also suggested the £5.09 was VAT not Duty, but have not issued new paperwork to say that (2% VAT?).
So this is the second lie they have told (in my opinion) to try and get me to pay.
The last resort is: "If you do not wish to pay this invoice, we are to call our customer service team and advise that the goods are to be returned to China accordingly."
This is the blackmail - pay our fee, even though no legal basis for it, or we will not deliver.
The only snag is I got the goods over a week ago.
To be honest this is, in my view, a scam. I cannot explain it any other way.
Handling the VAT/Duty is not expensive, it is simple, and something I am sure they automate. It is just one of the many admin and costs they have getting a parcel from China to UK, something the sender paid them to do.
Picking on this one thing to charge the recipient is silly. It is no different to deciding to charge the recipient for the diesel for the van to get to recipient as some sort of surcharge. It should be part of the costs of getting the parcel here, as paid by the sender.
The only reason they do this is (a) they are charging the VAT/Duty anyway so can tack this on with no effort, and (b) they can usually blackmail you that you won't get your parcel until you pay.
This is no different to a "speculative invoice scam" where someone sends a company an invoice for something that has no legal basis in the hope the accounts department will pay it. Seriously, it is invoicing for a charge that has no legal basis, not contract, just "because you can".
One possible option is to get an HMRC deferment account myself, and advise DHL, and other couriers, to use that.
I am tempted, as simpler, but it seems VAT is done specially now anyway, which is why most of my parcels have no issue. And if I ensure all my PCBs are "development" (which they are until I zap them otherwise) I probably avoid duty anyway. That said there is this magic £135 level that matters somehow, so maybe it is worth it anyway.
We'll see how it goes.
They stopped replying, and the last thing they threatened was returning the parcel to China.
Now they have sent a credit note for the £5 *AND* the duty charge. Even though I paid the duty.
It would make sense if they had returned the parcel to China, I guess.
I guess I take this as a win!
It gets crazier - I have two FedEx from same sender. The sender automate everything so labels will have VAT number I am sure. I'll know if/when it finally arrives.
Yesterday, FedEx, just arrived, no problem. No VAT bill. Just worked. Yay!
Today, FedEx advise VAT due for next package (plus admin fee).
This is silly as both DHL and FedEx say they do "Postponed VAT" (PVA) by default, so both should do this for VAT, even if not Duty. This was just VAT.
I have paid FedEx under duress, as they will not deliver until paid, and I got a "receipt" just for payment, but no paperwork to say VAT paid! So I asked for...
- A proper VAT receipt so I can reclaim.
- An explanation of why PVA (and hence no fee) done.
- An explanation of why the admin fee is valid legally, and refund if not.
Notably, I have said if they consider the fee viable under some sort of contract, which I dispute we have, but if they do, then I consider them in breach of said contract as they state on their web site they will do PVA by default. Their failure to do that has caused me admin to pay them and account on my VAT return, so not only do I want their admin fee back for the breach, I want them to pay me for my extra admin. We'll see what they say.
Update: Finally get a paper invoice, nice, except it does not say paid, and looks like they want paying (again). But also includes the original "commercial invoice" from JLC which *does* correctly show our VAT number, so PVA should have been applied.
It's easy to get a VAT postponement setup with HMRC, no money changes hands but you account for the 'notional' VAT on the next VAT return. The only problem I've encountered with this is that couriers such as DHL or UPS often enter a ridiculous amount (too low or too high) and so the notional VAT doesn't bear any relation to the actual value of the goods. But as long as the amount you put on your VAT return matches the total of the amounts that they've advised, it all just works.ReplyDelete
Duty is a tougher one. We regularly experience problems where senders don't correctly state the customs tariff code or coutnry of origin on the shipping paperwork, with the result that we end up paying duty on stuff that isn't subject to duty (like most electronics made in the EU, for example). I've had to threaten one supplier that we will offset the cost of the duty against their invoice and they still get it wrong.
And I haven't yet managed to find a way round the disbursement fees. Unfortunately we use most of the same carriers our suppliers use, so if we refuse to pay the disbursement fee thay just put our account on stop.....
I've been through the wringer on this one. I started a small business about 18 months ago, initially not VAT registered. I'm importing a lot, so had to register for an EORI number and a Duty Deferment account, meaning I pay Duty and VAT directly to HMRC.ReplyDelete
Except that couriers were crap at using it, and would instead whack a £15 admin fee on and invoice me. I've had endless arguments with FedEx that no contract exists between our businesses, without which they cannot apply late payment fees as per the late payment of commercial debts act, and that I did not request or require them to pay these fees on my behalf as I'd already made arrangements to do so directly to HMRC. They eventually just went away when it was clear I wasn't budging on this.
Now I'm VAT registered. This means most couriers will do PVA and I don't have to worry about the VAT, but it's screwed up the DDA because that is linked to your EORI number which changes when you become VAT registered. HMRC are unable to change the EORI number on a DDA, it is not something they have the ability to do apparently. So I'm back to square one on import duty.
There used to be some suggestion that writing on the notes “TO BE CUSTOMS CLEARED BY RECIPIENT ONLY” would cause some couriers to just deliver the item immediately and advise HMRC of any duty to be paid and the person owing the duty, and you’d basically get a bill in the post some weeks later, but sans any admin fee. No idea if that was or is still possible.ReplyDelete
If you're VAT registered, then importing should be a case of advising your EORI number (frequently GB[VAT number]000 for small businesses) to the courier. There is an HMRC website for 'check[ing] your postponed VAT import statements' which will let you see, after some months have passed, the date and value used by the courier. As another comment has noted, the problem arises when goods are incorrectly categorised and have duty erroneously charged. With DHL I have always queried the invoice stating the correct HS code (duty-free) and get a credit note a few weeks later.ReplyDelete
We are, and the sender provides our VAT number, and yesterday FedEx got it right, and previous DHL deliveries have got it right, as both say they do Postponed VAT (PVA) by default. But DHL went for Duty (my bad choice of category) and now FedEx have gone for VAT for no good reason.Delete