CARACAL April Newsletter - confusion ref UK VAT rules

[FIGHTS ON]

Apologies if this question is answered else where.......

 

So the Caracal April newsletter has arrived and yet again some great new sheets appear in the pipeline. However there is a genuine apology from Caracal Models stating that:

"We regret to let you know that due to recent changes in UK VAT rules, Caracal Models will no longer be able to ship orders for less than $180 to the United Kingdom. We will still ship orders for more than this amount, but you will be responsible for paying VAT upon receipt. "

 

I thought Caracal was based in Texas, USA and thus not part of the European Union (EU). The ONLY changes to UK VAT (Value Added Tax - a UK Government After Sales Tax used here) is to goods imported from the EU. Domestic goods and imports from countries outside the EU are NOT effected. 

 

So whilst, as a Brit, I very much regret the decision of the 13 states to go for Independence 200+ years ago (I know, Texas wasn't part of the rebellion!), I do acknowledge that goods from the USA are deemed as "imports from other countries". But there have been NO CHANGE to the rules, so technically I would/should be paying NO US State/Federal tax on the product in the US, but SHOULD be paying VAT/Import Tax here in the UK.

 

This applies (has always applied!) to goods be they from Japan, Hong Kong or the USA. Generally the supplier (more admin & hassle for him!) adds a sticker to the outside of the package with a declaration of the value of the goods contained. If the UK Tax authorities (HMRC) decide that the value of the goods (+ postage + insurance etc) exceeds a threshold (£15), they will charge the recipient (me) the TAX.  I have no issue with this, it is all done openly and fairly, the only rub is that the method for charging me is done by the UK Postal Service (Post Office) that add this charge plus their admin fee (a rip off) that I am required to pay before the package is released to me from the local Post Office. 

 

But unless I am mistaken, ALL the supplier needs to do (as he has always done?) is complete a declaration (in the form of a sticker) on the package of what the value of the goods are (in US $). It is up to the UK customs to decide what the TAX due is and pass that bill onto the Postal Service when they've finished allowing their dogs sniff the package for exports of Columbia's finest etc

 

I would hope most modellers are honest chaps, and having just retired from 33 years military service, all paid for by the UK Taxpayer, I would certainly NOT suggest a dishonest approach, but for Decals, we are talking about flat packages in envelopes whose "value" might well be declared as ........

 

As always, kindest regards from one of Caracals greatest fans

[Charlie D.]

There’s a whole thread about it one page back:

 

 

[sierrascale]

The problem for US hobby sellers is not whether you, as a customer, has to pay VAT, it's that the sellers, usually one-man operations that have enough on their plate, have to register and provide personal and business information on a funky UK tax website, and then collect, document and pay the VAT to the UK tax collectors. This is way too much accounting work for people who are not even in your country. Oh, they have to have their books open for inspection, whatever that means. If I were still running my vacuform company, I wouldn't ship to the UK either under these conditions. 

Edited April 12, 2021 by sierrascale

[KursadA]

I am sorry, but it looks like you are not sufficiently informed about the changes that are in force after Jan 1. They (HMRC) certainly eliminated the small value exception (so declaring a lower value does not help at all) and they definitely want the seller to get a UK tax number and pay taxes regularly to the UK.
 

Which would not have been a problem if they did not ask you to give them your complete bank information. Whomever first came up with  that idea had one too many pint of Guinness before coming to work on Parliament Street that morning.

 

 

[FIGHTS ON]

Thanks to ALL above for taking time to respond - and yes, once I posted I found the original thread D'oh! 

 

UK Tax & bureaucracy - the Gift that keeps on Giving!

[roym]

Fights On I'm trying to pm you but it's saying you can't receive PMs.

[habu2]

1 hour ago, FIGHTS ON said:

UK Tax & bureaucracy - the Gift that keeps on Giving Taking !

 

Fixed...  

[scotthldr]

The Post Office(Royal Mail), never added on VAT based on the goods unless it was over a certain amount, it was Custom and Excise charges along with the VAT that was related to those charges which was paid. These charges didn’t apply to goods/gifts under a certain value, however that value differed depending on what the goods were. Some goods including modelling supplies were exempt(if you use the correct commodity code), and this hasn’t changed. What has changed is the HMRC is now recouping VAT at source in order to capture the billions that are lost each year. You will still be liable for any Custom/Excise charges once the goods arrive in the UK where applicable.

 

The thing to note about this is it’s not just a UK thing, but will in time become the norm all around the World, the EU are adopting the same stance later this year. The UK just rolled it out on the 1st of January in order to coincide with Brexit.

Edited April 13, 2021 by scotthldr

[roym]

59 minutes ago, scotthldr said:

it’s not just a UK thing, but will in time become the norm all around the World, the EU are adopting the same stance later this year.

 Not entirely correct though, my understanding is with the EU system the main difference is sellers like Caracal can either choose to register (either directly or through an agent) in one country, (and be then able to collect at source but still sell goods to the rest of the EU) OR choose not to register at all and continue as currently, where the purchaser pays on receipt of goods, as is the case now. Its optional. He also won't have to "open the books" so to speak..

[scotthldr]

That’s the same though?

 

You don’t have to register to the HMRC ‘VAT at source’ scheme and you can still send goods as long as the value is greater than £135,  the onus is then on the recipient to pay the VAT.

 

You’re correct in saying that you only need to be registered in one of the EU member states and be able to trade with the entire EU, however VAT will charged at the rate applicable to the destination country. The limits are on par with the UK with the VAT free limit being abolished and a higher limit of 150E put in place. Your books will be open for inspection in the country of registration regardless, and records of all applicable transactions must be kept for 10yrs.

Edited April 13, 2021 by scotthldr