A new UPS scam, it seems.

I think I am seeing a new scam.

Background

When an item is delivered to UK from overseas, we, as recipient, may have to pay VAT, and occasionally duty, as the importer. It is a legal requirement.

Yes, as a business we have "postponed VAT accounting", and even the possibility of a "Duty Deferment Account", and DHL get some credit here for handling both very well, with no admin fees. UPS do not get any credit for this at all.

But as a consumer there are two ways this goes down.

1. They refuse to deliver unless you pay first, or they demand payment on the doorstep. The scam is they want an admin fee that was not pre-agreed with them, and not part of any contract. And you have no choice if you want the parcel. It is a scam as it breaks pretty much all consumer contract protection laws, and is admin that is normal and so should be part of what they charge the sender, IMHO.
2. They bill you later, and try and charge the admin fee as well. Usually paying the legally required VAT/Duty and NOT paying the admin fee, can work. They do not like it, but I do not think they have any legally enforceable right to their admin fee. Even so it is time consuming and hassle, and I really need to publish an admin fee I will deduct from such payments and argue that is as valid as theirs.

So yes, un-agreed admin fees to recipient are a scam. That is my view anyway.

Note: Royal Mail have a law allowing them to charge an admin fee, couriers do not. There fact there is a law especially for this - kind of proves it would not be legal without such a law.

A new scam

I am now seeing what I assume is a new scam. This time by UPS. Yes, I believe this is a scam.

This relates to a shipment with Duty/VAT pre-paid by sender. So no charge to recipient. No legally required payment by recipient. Sender PAID to get parcel to recipient duty/VAT pre-paid.

In this case a parcel ordered on Amazon UK (no clue non UK shipper). And Amazon do generally handle everything pre-paid Duty/VAT. They are actually really good at that, and for shipments to EU are "deemed supplier" and handle local VAT and all sorts. Very neat.

The item had zero VAT (condensed milk, but declared as tomato sauce!).

But UPS decided to send an invoice (after delivery) for £6.65+VAT (£7.98) for an "entry prep fee".

Did the recipient ask them to do any entry prep? No, obviously not. That is a normal part of delivery, something they are charging the sender for. So this is a case of charging the admin fee even when there is ZERO VAT or Duty to pay.

It is not a lot, but I bet a lot of people pay, and UPS must handle millions of parcels. This is a big scam, and needs to be reported.

I think this is time to report this fraud to the police.

Lectronz and IOSS

We sell lots in the UK (services and goods), and handle UK VAT, obviously.

Some of you may be surprised that A&A sell all over the world as well - development circuit boards. I have mentioned it, I am sure.

For now, we have used Amazon and Tindie.

Both are a problem...

Amazon

Two good aspects of Amazon, one is they will do fulfilment, so we send stock and they ship to customers. and secondly they handle selling to EU, etc, and the VAT and so on. We do not have to worry about it, and for these exports we are paid the VAT exclusive price.

Amazon have been arseholes, they unlisted the most popular product on a mere accusation, took months to sort with frozen stock, and finally returned after I threatened to sue. We lost all the reputation and reviews, and new listing of same item is selling 20% of the rate.

We now only list this one popular(ish) product on Amazon, as they do sell some, and sell to EU easily. But they did screw us over for no reason.

Tindie

Tindie are useless at tax and VAT. We have to do the shipping. However, we have integrated their API such that staff can see a list of orders, click and get postage via Royal Mail (with all the customs declaration stuff). They put in a jiffy bag, stick on label, and postman collects with the rest of the days postage.

Tindie were selling pretty well, close to Amazon rates, and sometimes more. But we had to ship. The much more slick postage integration I recently did makes it a lot easier and my staff can take over many of the products we sell without any hassle.

Tindie then shut down with no warning for maintenance, lied about it for two weeks, finally said new owners, made site live but with the one important feature of "paying us" (or anyone else) missing. We shipped some more orders, but have now zeroed all stock until sorted. They claim to have sent balance, but we will not know for sure for a day or two.

Lectronz

So we have signed up with Lectronz. They are tiny compared to Tindie, but that seems to be changing (I wonder why!).

They work the same as Tindie, free to list, charge a fee for sales, and card processing charges too (stripe). They even have Tindie API integration to import products (they then need a little work, and Tindie may be blocking some of it).

But they have a lot of extra bits...

Better shipping rates

The shipping is saner, it is all linked to sets of countries, but is all weight based. You set the shipping for a weight range, and you can also set a tariff rate for US as a percentage! This is lacking in Tindie.

They don't have a shipping rate that is price + price per kg (I have asked) as that would be even better as that is how we pay Royal Mail for international shipping.

Tariffs for US

But this means sales to US show (and charge) a specific tariff fee - very clear, and we link in to doing PDDP shipping with Royal Mail.

VAT for UK

We can, and have, told them we are VAT registered and selling to UK has 20% VAT. They shows this and add it at point of sale. Simple.

VAT for EU

This is where it gets fun. For orders shipped to EU, under (I think) €150, they will automatically work out the EU VAT based on target country, and add to the price.

They deduct this from what they pay us, and settle with EU VAT authorities for us.

They then tell us an IOSS code to use with Royal Mail to record as a pre-paid VAT. The customer then has no hassle with paying VAT on import.

This is really hassle free for us and the customer.

Other countries still have VAT on import and so is any order to EU over €150, but they managed to make that all very clear on the checkout page.

Do buy some stuff, here. I will be adding more and more soon.

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.

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.

Don't use UPS

I know I said before, but this is an update on the saga.

Executive summary

• I had 4 parcels sent from China (same sender) via UPS, all marked with our VAT and EORI.
• UPS tried to charge a fee, it seems contrary to HMRC advice they do not do Postponed VAT Accounting by default.
• I refused delivery and they confirmed return to sender (I confirmed the rest by email), but only sent 3 of the parcels back.
• They told the sender the missing parcel had been disposed off.
• They told me the missing parcel had been abandoned because "the sender is not served by UPS", something that is clearly a lie.
• They have invoiced for VAT (and an un-agreed disbursement fee) for all 4 parcels, and then late payment penalties.
• It has taken over 6 weeks for this to get close to being resolved.
• Use DHL, or maybe FedEx. Don't use UPS!

Postponed VAT Accounting (PVA)

I've explained PVA, but basically a VAT registered business getting overseas deliveries should get them without paying a fee if the sender includes the VAT/EORI when sending, that is HMRC advice to couriers. It gets declared on import and we (recipient) get paperwork from HMRC to ensure we account for it and the reclaimed VAT on next VAT return. Simple, easy, no admin fees, no delays.

• DHL manage it - not problem
• FedEx manage it - usually - not always - but seem to cave when pointed out.
• UPS want a separate signed agreement with us and the sender, and extra paperwork by the sender on every shipment. No way random foreign senders will do this. It is just, in my view, incompetent. Senders know to do VAT/EORI, but not extra UPS paperwork.

What did they do wrong?

I did try a parcel via UPS and it all worked well, but the good value of the parcel was $2, one of JLCs super discounted bare PCBs. That arrived, no fees, no invoices. Surprising. That lulled me in to a false sense of security and 4 more orders were shipped using UPS. Big mistake.

First arrived and driver wants a fee paid, I said no. I actually include the VAT on the address as an address line as well as on the waybill so I pointed to the VAT number on the label and explained it should be PVA. He had no idea, and literally threw the parcel back in the van.

Of the 4 parcelled, one other was tried and my wife rejected it. On that occasion the driver was very used to such things saying loads of people reject parcels with fees - usually because they paid fees to sender to handle and UPS cocked up (slightly different to out case). This really says something of UPS's competence.

The tracking showed each of the 4 parcels having multiple refused deliveries, this was clearly a lie. Not their first.

They took weeks to send 3 of the parcels back to sender. I guess they can take as long as they like. But when only 3 arrived we asked questions. They told the sender the parcel was disposed of. This was a lie, what a surprise.

They told me it was abandoned. It took weeks to get the explanation that "the sender is not serviced by UPS". This is a lie, wow.

They sent an invoice for the abandoned parcel (VAT and disbursement fee), which is not valid, obviously. I checked the HMRC import records and they only recorded (and hence paid HMRC) for the other 3 parcels. They were charging me for VAT they apparently have not paid HMRC. That sounds really fraudulent to me.

They sent invoices for the other three, even though returned to sender.

They kept quoting their terms and conditions that they can basically lose or destroy a parcel and not be liable to anyone. Wow! I have repeatedly had to explain that I am not subject to their terms and conditions. I have not agreed them. I am not a customer. I have no contract with them.

I have explained that if they have appropriated my parcel, that is Theft, a criminal matter. If they have lied ("sender is not served by UPS") to do that, then that is Fraud, a criminal matter. I was getting nowhere.

Surprise!

To my utter shock, they sent back the missing parcel to China. It arrived there after many weeks. The UK UPS contact seems unaware of this?!

But then, I get an invoice for late payment penalties - even though I have no contract with them that could lead to such penalties. Even statutory late payments penalties are a statutory contract term and don't apply if no contract. This is verging on harassment.

They have, eventually, cancelled invoices and late payment penalties. I have not seen any attempt for them to correct the HMRC import VAT reports though.

Update:

We are late March now. They are no longer chasing invoices or late payments, but would not accept that late payments are invalid and they should refund every customer (late payments are statutory as part of a commercial contract which does not exist in this case).

But they are now hassling JLC, the sender, saying a parcel is stuck in customs awaiting payment of duty. It is almost tempting to pay it and then claim damages when they fail to deliver the parcel (the one they sent back to China months ago).

Deliveries from China

I have PCBs made in China (well Hong Kong).

This is all my many small PCB projects (not FireBrick). I would rather use UK suppliers but I am sorry, even for just 5 PCBs, populated or unpopulated, even with carrier charges, China is way cheaper, I mean a *LOT* cheaper, and generally even faster. I'd love UK companies to up their game, and cope, and I have spoken to some, but they cannot get close. If they could get close, I'd got for it. It is a shame.

Duty and VAT

So, I have had to learn how it works. Before Brexit there was some stuff that worked well from EU. But in the last few years things have changed (not just because of Brexit), and now there are some things that are, honestly, better.

If you have ever ordered something as an individual from overseas, and it is over the small "gift" or "minimum" level where they don't care, you will have been hit with a surcharge by the courier. Often on the doorstep as a surprise.

This has three parts potentially.

1. Duty - some levy on some types of goods. The government have a moderately sane web site for this (https://trade-tariff.service.gov.uk/find_commodity) which helps you work it out. The system itself seems insane, and a minefield, but the web site helps. My experience is "duty" never applies to any of the bits we order, thankfully.
2. VAT - this applies always
3. Courier admin fee

The last part if the big problem, in my view. Handling customs, duty, and VAT, is an inherent part of the process of being an international courier. It is no more an unexpected cost than paying for petrol for their delivery vans. Yet, somehow, they decide they will charge the recipient for this admin work and not make it simply part of the cost of shipping.

This is simple for them, as they can legally expect the recipient to pay Duty and VAT so they add their bit. Refuse to pay and they won't deliver. It is a basic lien / or blackmail. In my view it should not be allowed. Royal Mail actually have legislation to allow it (!) which shows that it should not normally be allowed (i.e. if it can just apply normally then Royal Mail would not need special legislation for it).

The recipient has no contract with the courier. They have not agreed a price for service the courier has chosen to provide. Even if they accept they provide the service that is logically the start of negotiation on a fair price. As a consumer even an implied contract like this would be unfair and so not enforceable. But they have you over a barrel.

Postponed VAT accounting

If you are receiving goods as a company, well, as anyone VAT registered, things are better, finally.

It used to be you paid the courier, and their admin fee. You then battled to get a formal VAT invoice from them (not easy if payment collected on the doorstep). Then you included that VAT (not their admin fee) in your next VAT return to reclaim it - up to 3 months later.

End result - not paying VAT. But impacting cash flow, and you paid an admin fee.

Postponed VAT accounting changed that - you account for the fact you should have paid VAT on imports, and that you are claiming it back, in the totals on the next VAT return (surprisingly not separate fields for that). But you don't pay VAT on import. Obviously they get the tax when you finally sell with VAT at the final (higher) price.

This gives the courier no excuse to charge an admin fee - yay!

DHL, FedEx, UPS

The three main couriers used by JLC seem to be DHL, FedEx, and UPS. They have different prices and delivery speeds. FedEx is arguably the cheapest, and works (though hassle with them insisting on a signature). UPS are next. DHL cost more, but probably fastest. Until recently I was using DHL. I made the mistake of trying the others.

• DHL are quick, text/email progress, text/email on the day with time window, even live tracking the van, cope with leaving on doorstep if I ask, and handle Postponed VAT Accounting no problem.
• FedEx are OK, not the same progress messages, struggle to "leave on doorstep", but do handle Postponed VAT accounting
• UPS are idiots. Slow. No updates. And it seems have no clue on Postponed VAT accounting, so insist on charging on delivery, and their admin fee is expensive (more than difference in courier costs).

So, obvious lesson, do not use UPS, as they cost more in admin fee than it is paying DHL to send in the first place.

Don't use UPS, simple as that!

In practice the few orders using UPS in the pipeline are literally going to be returned to China, at UPSs cost, if they cannot work it out, and then I'll pay for delivery by DHL. This is slightly more than UPS admin fee, but it is the principle - I want UPS to suffer the cost of returning to China for their stupidity, and I've learned to never, ever, use them again, and tell you the same.

Just to add, we now have several supposed "delivery attempts" which I can prove with extensive CCTV were not, in fact, attempted, by UPS, over the last few days. Why do that?!?

Pre-pay

Another option is have JLC send via a courier but with pre-paid duty. Same set of couriers.

This is bad for several reasons - for a start the extra they charge up front is not the normal 20% VAT. It seems a random and larger amount. I have no clue why! But also it is not a VAT invoice, so you can't easily reclaim the VAT! To be fair getting a VAT invoice from couriers paid on receipt is not easy either.

It may work for an individual who cannot reclaim VAT, as may be cheaper done this way than VAT and admin fee on receipt. So worth considering in such cases.

Duty

I mentioned duty. This is not the same as VAT (which a business can reclaim). You have to pay it.

Duty applies on some specific classes of goods, from specific countries, and it really is very specific! It is basically politics.

Thankfully JLC are not totally daft - I can say the category for the goods, ensure it is right, and not have duty charged. I only got that wrong once, and had a couple of pounds duty (plus a courier admin fee)!

If you have to pay duty, tough, it may be that with enough imports an "account" somehow with chosen courier can avoid admin feeds for these. Not 100% sure. Thankfully we don't do stuff that needs duty.

It is nice that JLC offer a clear choice of couriers.

What is really nice is when sender will work with you to ensure clear and accurate marking of the goods. For a recent order from China (not PCBs this time) I searched on that duty checking page and identified the exact description and "category code" and the sender agreed to clearly use that wording and code on the parcel to avoid issues. I hope it works (will find out in 30 to 60 days).

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.

Possible VAT scam

The reduction in VAT rate on energy saving products has made me ponder that there could be a bit of a scam possibility here. And one I am not sure is even illegal!

These products are the type of thing that have long lead times and so it is very likely that any installers have a lot of "in flight" orders. Orders where the work (supply) will be after 1st April, but the order has already been placed and deposits paid. They are also the sort of order that is likely to be many thousands of pounds of work.

These orders are where the customer has been quoted a price, and as a consumer they expect that to be the price they pay in full. The fact that there is a VAT element (in this case 5%) should not really be a factor for such consumers.

As the deposit has been paid before 1st April, all of these will have a tax point that makes the work all 5% VAT, not the 0% VAT that applies after 1st April. This is because a payment brings the tax point back to when the payment was made even if the supply or invoice is later.

The fun starts with the special rules for VAT rate changes. These give the supplier the choice to change the tax point to the date of supply - i.e. move from the payment (before 1st April) to the work being done (after 1st April). This would allow the VAT rate to change to 0%. In my case this would save me over £1000. All they need to do is credit the 5% VAT invoice and issue a new 0% VAT invoice, and so make the job cheaper.

The issue is that this is the supplier's choice, not the customer's. They can choose not to. If the supplier says no, there is not much you can do, especially if you have in fact paid for the work already.

Bear in mind the the supplier does not gain or lose by doing this, they have to pay whatever VAT they charged to HMRC. If that changes from 5% to 0% and saves the customer money, the supplier does not lose out. So why would the supplier refuse to do that?

So where is the scam?

What if a supplier says they won't reduce the price, and you end up paying what was agreed (the inclusive price). Customer has not "lost out", they are paying what was agreed. No fraud, or scam there.

What if the supplier then decides to apply the special VAT rate change rules, credits the original 5% VAT invoice, and reissues for the same total inclusive amount at 0% VAT. Again, this is within the VAT rules. They can elect to apply the supply date as the tax point when a VAT rate changes.

Now, the suppler gains the VAT they would have charged, no longer having to pay it to HMRC.

HMRC have not lost out, as this is according to the VAT rules and new VAT rate.

Customer has not lost out, as they have paid the agreed total amount - what part of that is VAT does not impact them financially.

As the customer is a consumer, the supplier does not even have to issue a VAT invoice, so they don't have to issue the credit note and new invoice that was created to change the VAT rate.

So, in my non lawyer view, this is not even illegal in any way. If nobody is losing out there is no fraud involved.

Even for a small supplier this could easily make the tens of thousands of pounds. For some big national supplier this could be well worth doing.

The only way this could be an issue, perhaps, is where the supplier has provided a quote or invoice with the VAT shown (which they don't have to for a consumer). They are in effect stating an amount of what was paid is a tax. If that is untrue, maybe that is fraud as they have gained from a lie... If they did not issue a VAT quote/invoice, then charging to same agreed total amount is probably quite valid.

Lucky

I have been rather lucky that I am finally getting air-con and solar sorted, both with installation dates in April, so I can actually benefit for this rate cut! I was gobsmacked to find anything personally beneficial from this government shit show to be honest. And after a little to and fro, I have confirmation from both suppliers that they understand the rules on the VAT rate change and can adjust my bill accordingly.

VAT on energy products

There is a low (5%) rate on some energy saving products - the rules are complex to say the least and mainly relate to installers, and even the ratio of labour and parts matters. Heck, apparently, it matters if the customer is over 60 (which my wife is, so yay!).

The chancellor reduced VAT to 0% from 5% from 1st April with very little notice.

On a political point, this is batshit insane - the reduction will not help a single person that is struggling to pay their energy bills. You need to have the capital (or be able to get a loan) to install solar, etc, which won't pay back for years. That is no help to anyone on the bread line whatsoever. Even then, the result of this may simply be installers increasing prices and no saving to the customers at all!

The way the rules work means that even those that can manage a small amount now and then to make a DIY solar install and save some money are not helped as they end up paying the normal 20% VAT for the kit.

So this brings up VAT rules, and the rate that applies. It all comes down to the tax point - the date that applies for VAT purposes. This dictates which VAT rate applies when VAT rates change.

We saw a lot of this and some detailed discussion when VAT rates increased last time. This is the first time I personally have seen a decrease, and it raises some interesting points.

The tax point is based on several things. The simplest is the invoice date. But if there is a payment before that, or the work was done more than a few weeks before that, then the tax point moves back to that point. This means the tax point can be moved earlier just by raising an invoice or making a payment, even with long payment terms, but the options to move it later are limited.

However, good news!

There are special rules for VAT rate changes!

These mean that the usual rules that pull back the tax point to the earlier invoice or payment do not have to apply. If the supply is on/after 1st April then the supplier can use the date of supply as the tax point and so charge 0% VAT.

This is down to the supplier. All they have to do is credit note the 5% invoice and issue a new 0% invoice. Simple paperwork exercise.

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.

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.

Amazon and VAT look, err, fun

Obviously, selling things through Amazon, we have to make our accounts work. Normally we would invoice and charge and ship, but with Amazon FBA, all of that is done by them. With us shipping, we still have the issue that Amazon have charged the customer so we are just shipping.

Thankfully Amazon allow various reports, and there appear to be two.

One report for orders we have to fulfil or have fulfilled.
One report for orders Amazon fulfil.

Not the same format!

Both are tab separated files, but one has headers like sku, product-name, quantity-purchased and one has basically the same fields with headers SKU, Title, Dispatched Quantity. It was not too hard to handle that, but rather silly.

VAT inclusive/exclusive.

We have several orders and most list the item-price (e.g. 6.00 for a pack of cards) and the item-tax as 0.00. However, on the report fulfilled by us, one person was listed as item-price 6.00 and item-tax 1.00. I.e. the item-price is inc VAT. I can only assume they are a VAT/business customer.

However, on the fulfilled by amazon, we have some items listed 6.00 Item Price and 0.00 Item Tax as above, but some listed Item Price 5.00 and Item Tax 1.00. I.e. the Item Price is VAT exclusive when there is VAT.

The same logic seems to apply to Delivery and Gift Wrap values.

Just to add to the fun, when purchasing two items, the *ITEM* price is in fact the total price, not the per item price.

I'd like to thank our customers for providing such a fun range of possibilities so I could work out what was happening.

Amazon fees

It looks a lot like the fees Amazon charge have no VAT invoices. This is a tad confusing. It seems they don't charge VAT as long as we have provided a VAT number, which fits with how EU works now, but I was under the impression a formal tax invoice stating that was still needed. Also, as the services I am buying are in the UK, I am a tad at a loss as to why there is not VAT as normal even if they are not a UK company. I am not having a lot of luck working it out. I may ask HMRC to explain it. Facebook seem much the same, no sign of a VAT invoice from them if you advertise on Facebook. At the end of the day if they charge VAT we reclaim it from HMRC and they pay it to HMRC so it is academic - apart from when it is not clear if the price quoted has VAT or not.

However, if so, the control pages are especially annoying - well, infact, plain wrong. For example a pack of cards sold at £6.00.

It says £6.00, with two Amazon fees of 90p and 80p and then says net proceeds excluding VAT of £4.30. I had assumed it was in fact £4.30 inc VAT, i.e. the £6.00, 90p, and 80p were all VAT inclusive figures, but it does state £4.30 exclusive of VAT!

However, the sale price of £6.00 means we pay VAT of £1.00, and it seems the 90p and 80p have no VAT to reclaim, so actually the net proceeds are £3.30 excluding VAT and not as stated £4.30.

As it happens, at these quantities, the cards cost more than £3.30+VAT. I thought I was covering costs, and now I realise I am not quite. One reason these are somewhat of an experiment in selling via Amazon - get it all sorted and understood with small value items like this.

The main thing is we have imported the data to create the VAT invoices on our systems for the sales and ensure we are paying HMRC the right VAT due.

It gets worse!

I checked it all added up, which is fine, but then I realised that there was something amiss. One of the figures on the statement is "Other (shipping & gift wrap credits)" with a value of £8.49, but on only one item has someone paid postage and they had paid £4.49, so where was the extra £4.00 from?

What was especially odd is the totals added up - the total sales figure, plus this £8.49, added to the total invoices I had imported. I went through checking there was no gift wrap or other shipping charges. There was not.

So juggling with what added up - if I total the Item Price and item-price from the two reports I do get the same total as they show on the statement. Good, so where is my £4.00? Well, it is the three orders that had a separate Item Tax not included in the Item Price column (four packs of cards in total).

WTF? That means they are including the VAT charged, but only where separately itemised, in the "Other (shipping & gift wrap credits)" figure on their statement.

I think my accountant will have a nervous breakdown after seeing this.

P.S. They do provide an "invoice" for the advertising charges only, which says "(includes applicable VAT)" on it, and says "This is not a VAT invoice" and does not say what VAT rate, country, or amount has been charged. FFS

P.P.S. Amazon actually sent invoices! And have out VAT number and state £0.00 VAT!

Maths test

This is an invoice from Viking (Office Depot International (UK) Ltd). I am at a loss as to how it is worked out.

The items are simple, there are £58.25 of items with 20% VAT and £53.98 of items with zero VAT. There is also a phantom £2.26 "Protection Plus", which I have no clue about and no idea if VAT applies or not.

The items are not clear whether they are quoting VAT inclusive or exclusive, as neither way do they add to the stated NET total of £102.23.

VAT of £11.06 is not right on the VAT listed items, whether they are VAT inclusive or exclusive and whether the £2.26 has VAT or not or whether it is VAT inclusive or exclusive.

Basically, I cannot find a way to make it add up at all. Any maths or accounting genius out there that can explain it to me?

P.S. Their customer service number is an expensive 0844 number which is a problem under current legislation!