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.

Making Tax Digital

The "challenge" continues.

Just a reminder - EVERY UK VAT REGISTERED COMPANY (that has to be registered) must be using the new "Making Tax Digital" API to submit VAT returns from April 2019. Do not forget!

We have s/w for this (Onion Accounts), tested, and approved, yay!

So we are trying to put the company (A&A) on the "pilot" so we can actually submit our own VAT return using the new system, before it is all mandatory. A final double check that all is working as it should.

We get to authorise it all, using OAUTH, and get an access token for the read:vat and write:vat access. But it does not work, we are told we are not authorised!

Checking the government gateway VAT pages it seems we have to "sign up" for the pilot. That may explain things, except if we are not signed up then why allow us to "authorise" the access? Surely the OAUTH process should be saying "You are not signed up for MTD VAT" rather than giving the access token and the failing when we try and get the VAT obligations? Crazy...

So, let's try and sign up.... Nope. We get "This service is only available to some limited companies, sole traders, partnerships and VAT groups." which is not that helpful.

We also get "You will be able to sign up for this service from April 2019."

Hang on?!?! This is "Sign up for the pilot". Why would I be able to sign up for a pilot in April 2019 when the pilot is surely over (as MTD VAT is mandatory from April 2019)? Surely they are not making people "sign up" for the mandatory process (they call it a "service" which I dislike).

A bit more digging and we find "You will not be able to take part in the pilot at the moment if you:" ... "currently trade with, or have traded with the EU".

Two issues with this...

Firstly, surely you want people on the pilot with the complex edge cases, not the "simple" cases. You want things to break (if they are going to break) in the pilot and not once the process goes live. So why exclude these edge cases?

Secondly, and this is where the mindset has got us brexit, what UK company does not trade with the EU? Hardly any, I bet. All of our customers and suppliers are in the EU! Yes, almost every single one is also in the UK, but the UK is part of the EU.

Is a Dutch company trading with a Dutch supplier, "trading with the EU"? If yes, then so is a UK company trading with a UK supplier. If no, then neither is a UK company trading with that Dutch supplier. Either the supplier (or customer) is in the EU, or they are not. They are not suddenly "not in the EU" if in the same country as the trading party. Next we'll say that trading with someone else in Bracknell is not trading with the UK, it is trading with Bracknell.

The ideas that there is the "UK", and there is this separate non-UK "EU", an idea perpetrated by HMRC in this case, is part of the problem, IMHO.

Update: Sounds like the "traded with EU" restriction goes away next week, so we may be able to make some progress!

Update: (4th Dec) We have "applied" for the trial.

Update: (5th Dec) We managed to file a VAT return, just in time.

On line orders

I ordered something recently, on-line, on a whim, a new iPhone case.

I paid in UK pounds (£) there was no immediate clue that the site was anything other than a normal UK supplier selling something to people in the UK.

I ordered on Saturday.

What pisses me off is how this is so much not the case. It seems it was a US company, and I know things can get from US, or almost anywhere in the world, to here, in a day or two, but they picked the slowest means to send to me on the planet from what I can see.

They seem to have used DHL (which people will know how I am unimpressed with them) and some sort of service that is slower than slow - delivered by snails. This is an item ordered and paid for on 7th. It is now 13th, and the damn thing is still in the US, FFS.

What is worse, there is a chance I end up with some damn duty or VAT bill to pay on top.

I just went to a web site - saw an item listed in £ and paid, why the hell is any of this my problem now?

All I can say is it better be a damn good phone case when it gets here!!!

P.S. It did eventually arrive. Quite a nice case for £16
P.P.S. It promptly broke, so I have a spigen one now, much nicer.

Tax avoidance

Once again I got in to a long thread on the book of face, and so I thought I would consider my ideas on this and condense them down a little. The issue is this meme:

So what do I think they are trying to say? I think the message is that we are wasting resources chasing benefit fraud when we should be spending effort chasing tax evaders.

Sadly I see a lot of problems with this graph, and that comparison.

For a start, even if you assume the figures are right, the comparison is of apples and oranges. The resources spent chasing benefit fraud are not the same resources spent considering tax avoidance issues or chasing tax evasion. They are separate groups of people with separate roles. So why compare them - it is not like we can "steer the countries resources" from one to the other in any meaningful way. Ultimately things like benefit fraud are worth chasing if the amount saved by doing so is more than the cost of the people doing the chasing, simple equation! Things like changing laws to reduce tax avoidance is a matter for parliament - a group of people that do not spend any time chasing benefit fraudsters. So again, not a sensible comparison in any way at all.

But there are other issues, like what is the point of "benefits unclaimed" in this at all? It is green for some reason, perhaps because it should be below the line - the country and tax system do not "lose" as a result of benefits unclaimed. In fact they gain, seemingly a lot. If this is about where it is worth spending resources so as to improve the taxes collected (which seems to be the point of comparing with tax evasion), then it seems to be suggesting we spend some effort making benefits more complex and harder to claim (some would say that is exactly what is happening).

Then we have the big issue (which seems more controversial) of the amounts included in the tax evasion column. The heading is "tax evasion" but the columns say "avoided and evaded and uncollected". Well that is three very different issues. Uncollected is incompetence in HMRC that needs addressing. Evaded is illegal and needs work by HMRC to collect and/or prosecute. Avoided tax is legal and does not need any work by HMRC or the people that chase benefit fraud - it is a matter for the likes of parliament to consider changes to the laws on tax. We have no idea which of those there are represented or to what extent in those columns.

Also, to a large extent, estimating the amount of tax avoided is just silly. It is trying to work out what could have been paid if people had chosen to structure their business and tax affairs in a less sensible way. But why assume anyone would do that and how stupid do you have to assume they will be? As that will impact the figure. Do you go as far as assuming they won't but some duty free scotch next time they travel and include that tax in the figure?

And what avoidance do you include - there seems, from the Facebook debate, to be different types of tax avoidance, and some (like investing in an ISA, or buying duty free scotch) which are "OK" and some (like having an off shore company in a low tax country) which are apparently not OK. So which are included in the "avoided" figure? All? Some? Only those "morally wrong" somehow.

It is interesting how those that say there are some tax avoidance ideas that are "wrong" seem to pick those which are unavailable to themselves. Someone on PAYE is happy with the paying in to an ISA,  paying in to a pension, or even buying a bottle of scotch, but not with running an off shore company. It seems the "moral" choice here is "anything I could not do" (usually because doing so is simply too expensive).

One rather odd point came up, with an area of tax avoidance that is just in the "cannot do that myself" category for most people... My company does a lot of R&D, and we make an R&D tax claim. All correct and legal. It means we get a nicely reduced corporation tax bill. I know one company that pays no corporation tax as they do a lot of R&D, but still makes a healthy profit.

One person felt this was "reasonable" because we were doing the R&D anyway. Indeed, he specifically asked if we do R&D in order to reduce our tax bill.  It seems he would consider it "unreasonable" if we had chosen to do the R&D simply to save on tax.

Now that really does seem odd, as the whole point of the R&D tax savings is to encourage companies to do more R&D. The tax system is set up on the assumption that businesses will change what they do so as to reduce tax - that they will invest more in R&D so as to be able to make this tax claim.

Yet that very action is seen by some as "unreasonable".

I struggle to see how the tax system, or anyone, can assume companies will somehow not create off shore companies, and so on, if legal to do so, but will assume that companies will invest more in R&D if it saves tax. Both done to save tax in a legal way.

Indeed company directors are meant to act in the interests of the members of the company (shareholders) and so have an obligation to do what is in their best interests, legally.

But basically, the graph is a pile of shit, and makes no meaningful comparison of anything.