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!

Tax, duty, VAT, GST, Tariffs on import?

I sell stuff on Tindie. (see www.tindie.uk).

Now, when you get it, if not in UK, your courier may charge you some amount of tax, duty, VAT, GST, tariff, or admin fee on receipt. Pain in the arse, I know.

So could we sort this as seller?

Well, basically, we have no way to know what tax, duty, VAT, GST, tariffs, or admin fees might apply. It is not even a simple per-country thing - it depends what you are selling, and the country, and in some cases even matters what region in the country where you are located. If you are registered for VAT/GST in your country you may be able to avoid some charges on import. It is simply impossible for us to work this out, even if we wanted to.

And, of course, in some countries (sorry USA), the tariff may change from day to day at the whim of a mad man, so really we would have no clue. 

Even if we knew?

Even if we knew the exact amount you are liable to pay, I have no easy way to "pre-pay" that as sender. Some couriers clearly do this (my experience being EU based VAT, and even some US shippers to UK, surprisingly), but Royal Mail, which we use, do not seem to have any way - we just have a customs form to complete on sending, and you end up paying the extras on receipt - we have not way to pre-pay your import costs.

Even if we could pre-pay?

But even if we could work out what is due, and even if we have a way to pre-pay it for you, what then?

Well simple, it adds to the cost for us, so we would simply add to the price. Indeed, that could mean more, as setting our price higher to cover such charges probably impacts the charges as they are often a percentage of sale price. So actually, if we could work out what was due, and pre-pay it, it may mean we end up charging you even more that if you just paid it on import.

So, tough.

Simple answer is we quote a price, we charge a price, and you get to pay your government any import duty, tax, VAT, GST, tariffs or whatever when it arrives. Sorry.

Customs

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!

Duty

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.

Admin fees

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.

Blackmail

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.

Scam?

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".

VAT

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.

Result?

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!

FedEx

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...

1. A proper VAT receipt so I can reclaim.
2. An explanation of why PVA (and hence no fee) done.
3. 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.