Import Duty

Latest update on import Duty and VAT.

VAT is sorted for most couriers (well DHL and FedEx) as postponed VAT accounting. This is mostly automatic.

For duty we have an HMRC account now, all works. We advised DHL and they were helpful which was shocking. We have now received our first import delivery with duty, albeit £7.25. Emails from DHL about it. Statement from HMRC. I expect the direct debit soon from HMRC. ZERO ADMIN FEE from DHL.

This is finally clean, and no stupid admin fees. DHL for the win. Well done.

I have emailed FedEx and they are struggling to handle it, so yeh, not good. Hopefully we sort with them soon.

But DHL are still arseholes, sorry.

Before this import was one with £5.76 duty, which sort of kicked off sorting this all. They invoiced £5.76 plus a £5 admin fee.

To be clear, we have no contract with DHL, their contract is with the sender.

What is extra fun is when they told us, before delivery, we said "but we have a duty deferment account at HMRC" (not realising this needed setting up in advance with DHL), but also advising our published terms which state a charge of £20+VAT admin fee for payment demands from couriers.

Even after that they delivered - in my view that means they have accepted our terms.

Invoice for £10.76

However, being generous, and as they had actually been helpful getting the duty account all sorted, I confirmed we would pay the £10.76 and checked bank details for this. We paid it on 9th Nov, including the £5 admin fee we never agreed. We quoted the reference they asked us to.

Note, if you pay A&A with right reference it appears in your A&A account in seconds, you are immediately emailed a statement, and if clearing an overdue debt your services are instantly re-instated, 24/7 automatically. Handling incoming payments (especially if they have the correct payment reference) is not hard, honest.

Threat of legal action

Today (13th) I get a threat off legal action for £10.76. Yes, the £10.76 I generously paid (generous as it included £5 I never contracted for or agreed).

You can imagine the reply I have now sent...

Fucking arseholes!

More on VAT an Duty on imports

I explained PVA (Postponed VAT Accounting) - it is moderately simple, we need (a) a courier that is not brain dead (so don't use UPS), and (b) EORI or VAT stated on parcel - which a lot of senders allow for anyway but could just be squeezed in to address.

Courier declares the import to HMRC. HMRC do a monthly statement to allow for on VAT return. VAT all cancels out.

But duty is different!

We get duty much more rarely - some product types from some countries, and very much non obvious it will apply when you order. It depends on where supplier ships from, or possibly origin of goods (not sure which), and how they declare the goods.

It is usually small, meaning it can easily be way less than courier admin fee even! Very annoying.

Duty Deferment Account

The answer is a duty deferment account. Unlike VAT which cancels out on the VAT return, DDA is a separate account with HMRC where they charge you the duty due. There seems to be a pre-pay option but not clear how that works, and a direct debit option, and a need to guarantee the duty due. So a tad more messy. We have done all that.

But surely that is it - link to your EORI/VAT number on the parcel and have duty paid by monthly DD without any annoying courier admin fees.

No, not actually!

No, it is not so simple (WTF not?).

I have a DDA account number which has to be quoted, which is not the VAT or EORI number.

I have to complete a form and send to HMRC telling them the exact details of the import agent(s), i.e. couriers, I wish to use and authorising them to use the DDA account number.

I also have to tell the agent (e.g. DHL) to use the account and confirm they have the authority (copy of the form).

Why make is so bloody difficult! Arrrg!

Oh, icing on the cake, the form does not appear to actually be on gov.uk web sites anywhere!

I'll see how this all goes... Now to argue over a £5 admin fee with DHL.

Update:

Even though DHL, and web pages on gov.uk, all refer to this mystery form, apparently it is now an on-line thing - so simpler, but not as easy.

What counts as R&D?

One of the things a company can do in the UK is claim some tax benefits for spending some of the company resources on R&D. It is an incentive for companies to do R&D.

As a company that does a lot of R&D, we work with a really good agency on this, and get some tax credit. This works well, and is indeed an incentive for us to do more R&D.

This year the rules have changed slightly, and I noted a couple of them. It is all a bit open to interpretation, but a couple of the points seem a bit odd.

Open source

For a start, if we, as a company, did some purely open source stuff that was not direct benefit to us - by way of giving back to the open source community, it seems that would not qualify for R&D tax credits. It has to benefit the company. Thankfully this is not really a problem as pretty much all of the open source stuff we do is used in house and so benefits us directly as well. Some of the stuff we don't use in house, is actually stuff we then make and sell, so a benefit to us. But it is a disincentive for doing something purely open source.

Super human engineers

The other one that is odd is that things are not R&D if they would be apparent to a competent engineer in the field with publicly available information.

Well, we employ competent engineers. everything they do is apparent to a competent engineer. It almost sounds like, to be valid R&D, we need super human engineers, which seems a bit much.

We had a lot of discussion on this - one thing is the "publicly available information". This has meant we have focused a lot on things where the publicly available information is wrong or incomplete. And notably where what was "apparent" to the competent engineer was in fact wrong when tried.

Though one other aspect is that we think we can validly say that anything we are doing based on closed source designs and code is something that qualifies because that closed source is not publicly available information. None of it would be apparent to our competent engineers without access to that closed source information. So again, this seems to be discouraging open source.

Even so, the end result was a good meeting today, and plenty of R&D work.

Making tax digital

HMRC are expecting VAT to be submitted electronically directly from accounts systems. This seems vaguely sensible. It is mandatory from April 2019. It avoids typing mistakes at the very least.

So, we look on HMRC developer web site and see that they list APIs. They list some using RESTful APIs and some XML ones here. The XML ones include submitting VAT returns. Something we have had for some time, and is all "digital" as required. So we were thinking, cool, we did this years ago, not an issue.

But we actually asked them about it, just in case, and they are very confusing. They say the XML API does not "support" making tax digital - which - err - makes no sense, it is digital. They apparently have an API that is not the XML API for the MTD VAT submission but oddly it is not in that list of APIs, so we have to register with them in some way to get the API.

The web site does not say the existing XML API is going away, indeed they confirm it is not, but apparently will not be valid to use for MTD, which makes no sense whatsoever.

Why are HMRC not accepting their own digital XML APIs that they have in existence for submitting VAT digitally? An API they confirm they are not withdrawing? Why have they apparently produced secret new APIs to submit it? It makes no sense.

Thankfully it will be simple enough to do, one way or another, and there is still plenty of time. The recording of VAT and ensuring it is all digital is all covered, thankfully.

Update: We have finally got access to the documentation on the API, it is hidden behinds a login and not published along side all of the other APIs. There is no reason why the API for this should not be published, and even less reason when you consider the other APIs are published. It also makes little sense for a mandatory API to be in a beta state only 6 months before it has to be in use by every accounting package in the country. Thankfully it is very noddy JSON/OAuth.  I cannot see anything in VAT notice 700/22 that makes the XML API invalid in anyway. The OAuth, of course makes assumptions, i.e. that someone is authorising a third party to access / submit VAT details, which is not the case here. There seems to be no "journey" (as they describe it) for someone that is submitting VAT returns for themselves using their own software. They also have gems like they want to know the public IP address and port of the web browser that requested filing the VAT return - forgetting that it may not have a public IP address even as it may be on a private network! I just hope it copes with that being an IPv6 address.

Update: WTF? They made us jump through hoops before letting us have access to the API documentation for submitting the VAT return - but their own service standards require that everything they do is published, reusable, open source, and they even have a GitHub page!

Update: I am pretty sure I have now found a newbie error in the HMRC OAUTH stuff (mis escaping form data in a sequence of pages) - we'll see what they say. Worked around.