I have bought stuff from USA companies on and off for 20-odd years and, although it’s a bit of a faff with import duties and VAT, I have not had a problem.
This week, I ordered an item from https://saeng.com, a company I have bought from before and thought everything was dandy. Late yesterday I received an email saying they were cancelling my order because
“Our site was is not configured to process the new UK VAT tax. I will be applying for the license and try to get everything lined up as soon as I can”
I know that buying stuff from the EU has got more difficult following Brexit but has anybody else had an problems with purchasing for the USA? Or is somebody over there, like the US Postal Service, giving Saeng duff information?
Afaik with the UK leaving the EU it’s chosen to adopt a new style of import tax, where companies need an account to pay UK tax before they can export here. This is worldwide, not just for EU countries.
This is why it’s become harder and more expensive to order things from abroad, but still, at least we have blue passports now.
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Thanks Boris. Looking at the HMRC website, nothing seems to have changed. i.e. it says VAT is calculated by the postal or courier company once the goods arrive here and the customer pays it before it can be delivered. There’s no mention - that I could see - of the other side, i.e. the supplier, having to do anything different. I’m confused!
This is actually an E.U. change so nothing to do with Brexit, although they have delayed their introduction by six months until July.
https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en
But essentially any company outside of the U.K. selling to a consumer here now needs to register and collect VAT on their sales, rather than it being charged to the customer on import.
Some, usually smaller, international companies will no longer sell to the U.K. for this reason. Possibly the same will be true of E.U. countries from the summer, although a seller only needs to register in and pay VAT to one member nation, who will then arrange distribution to the appropriate country. So the added effort may be worth it given the size of the market, in contrast to the smaller U.K. market.
Brexit the gift that keeps on giving. Wait until April May when the full customs policy comes into full force.
And still no benefits have been forthcoming on leaving the EU.
OK, all looks like a fantastic bonus fron Brexit!! I do see a way out though. The new regs say that if an overseas seller is selling to a UK, VAT-registered business, then they can do it the “old” way with the buyer paying the VAT at the UK end.
It so happens that I am a UK VAT-registered business (I am a self-employed courier)so I’m going to give that a go.
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I’ve seen a number of small retailers on Twitter saying they are reluctantly unable to supply goods to the UK because the paperwork HMRC now require has created a new £1,000 per annum overhead for them. Lot’s of small retailers can’t afford this.
When purchasing from a company that sells into the UK. That company should pay the UK VAT@20%.
You pay the company for the goods including the UK VAT but excluding the countries own sales tax as goods are for export.
Sales tax is only for goods bought in that country for use in that country.
What I don’t understand is why the system was changed. Under the pre-2021 regs, the seller in, say, USA, charged the buyer in UK his price for the goods, let’s say $100. He posted the package to the UK and, on receipt here, the GPO said, "here is something being sold to someone in UK. It cost them $100 so we will ask the buyer for VAT on that amount, i.e. 20% of whatever the Sterling equivalent of $100 was at the time the package got here. The buyer, i.e. you, me, whoever, pays up and we get the parcel.
Now, under the new scheme, the seller in USA has to register with the UK VAT authorities, this costs him a registration fee.When I want to buy something from him he says I have to pay UK VAT on the cost of the goods. So, he has to convert his US$ amount to Sterling so he can charge me 20%. I pay for the goods in Sterling on my credit card and the amount is converted into US$ by the bank. That incurs a cost. The buyer sends me the goods and then has to send the VAT portion of what I have paid to the UK VAT people - in Sterling, again, it incurs a forex cost. If I was John Doe in USA - or anywhere else for that matter - who didn’t sell much to UK, I would say stuff it, it’s not worth all the bureaucracy. Note, we are the only country in the world doing it this way, WHY?
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As it says on the link I gave:
The VAT e-commerce package will facilitate cross-border trade, combat VAT fraud and ensure fair competition for EU businesses.
I believe the starting point for these reforms of the VAT system, which began in the early 2010s, claimed fraud collectively cost E.U. member states €50bn per year.
Also, as said, the only reason it is only currently being applied in the U.K. is because last spring the E.U. postponed its implementation until July. This was because it is part of a larger set of VAT reforms so they felt a delay to the whole set of reforms was appropriate whilst addressing the Covid pandemic.
Given the Brexit changes it was presumably felt it made more sense to retain the original date in the U.K. Changes were happening on January 1st anyway, so this way everything would happen at once rather than having to go through a second change to the VAT system six months later.
All fine n dandy in theory but I don’t see how putting people off from selling to UK will “facilitate cross-border trade”
Just one of the things we Remain Voters warned you of.
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They mainly mean cross-border trade between E.U. member states, with a number of the other provisions also related to that. Although it also helps with non-union trade as sellers will now only need to register for VAT in one member state rather than each member separately. This extends a scheme already in place for digital products and services.
But the U.K., who were part of drawing up those changes, chose to forgo those benefits and placed themselves outside of that market. So instead of one VAT registration giving access to a population of almost 520m, non-union business will now need an E.U. registration to reach 450m people, and another in the U.K. to reach 70m people. Whether or not businesses will feel the later worth the effort for a smaller market, , that is what people voted for, and they knew what they were voting for, and now we can become part of the U.S., and now we are sovereign. And all that.
But it still cuts fraud and better helps local business compete, so it would have made no sense for the U.K. to abandon the changes post-Brexit.
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