Author Topic: HMRC & RoyalMail arrangement  (Read 1265 times)

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Offline noreply

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HMRC & RoyalMail arrangement
« on: June 18, 2020, 04:22:47 pm »
I ordered an item from US supplier (value ~ USD25)

The supplier shipped this to me (UK) using USPS - the charge for this was USD14

After 4 weeks - I receive note from Royal Mail - informing me that my 'package' is ready to be delivered AFTER I pay a fee of GBP12

The GBP12 includes the HMRC VAT (tax) of 20% which was GBP4 AND Royal Mail 'handling charge' of GBP8 - Total GBP12

So...

After paying USD14 - I get the privilege of USPS 'offloading' my package to Royal Mail - who as 'agents for HMRC' charge me GBP8 to collect GBP4 for HMRC

- what a great 'rip-off' business  :-DD

I might be better off (next time) not bothering in buying anything which is going to be shipped with either USPS or Royal Mail - just jump straight to DHL or FedEx or UPS instead - despite the extra cost - I will get my item in 3 days and won't be hostage to Royal Mail  :P

Have you had similar experiences??

And if so, what can we do to avoid the 'arrangement' where Royal Mail rips you off when collecting VAT (tax) which is less than the flat handling fee of GBP8 they have??

 

Offline tom66

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Re: HMRC & RoyalMail arrangement
« Reply #1 on: June 18, 2020, 05:04:06 pm »
This is pretty common and it is because there is no trade agreement over import tariff between the UK and USA.  (This will, regrettably, be the experience when Brexit is completed, assuming we don't go zero tariff on everything.)

Ways to avoid it:
- Seller does DDP and pays VAT on your behalf.  This happens usually if you order from a company like DigiKey but it is enormous hassle for a small supplier.
- Items below a certain limit (I think it's £15 or so) don't attract the tariff, but beware, shipping is sometimes included in this
- Seller lies about value but that's a crime and no one would do that, right?
 

Offline noreply

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Re: HMRC & RoyalMail arrangement
« Reply #2 on: June 18, 2020, 05:17:04 pm »
This is pretty common and it is because there is no trade agreement over import tariff between the UK and USA.

Totally agree ...

But in my instance there is NO IMPORT tariff - because there IS a trade agreement between USA and UK on electronic components - BUT you still have to pay the VAT (Tax).

Problem is there is no mechanism to collect the TAX - like you said the larger supplier (Mouser , etc..) have arrangement where they collect the tax somehow and you are good-to-go with your shipment - so when it lands in the UK - Royal Mail cannot extort their GBP8 for handling your package to collect the TAX for HMRC  :P

I guess it can only get worse with UK being outside the EU trading zone - Bloody Boris - the buffoon strikes again  |O
 

Online Fred27

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Re: HMRC & RoyalMail arrangement
« Reply #3 on: June 19, 2020, 09:27:26 am »
I'm not sure you can blame Boris. It's been this way for quite a while. I agree it's frustrating when the handling fee is more than the VAT. I got stung this way once on a freebie branded mug from an electronics company that was marked as (I think) $15 value - enough to trigger VAT and handling charges anyway.
 

Offline noreply

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Re: HMRC & RoyalMail arrangement
« Reply #4 on: June 19, 2020, 10:43:25 am »
I'm not sure you can blame Boris ...

Not for THE EXISTING VAT & collection policy for sure  ;)

But I can give you a long list of things which you CAN blame him for directly  :scared:

My point is that if his government cared about the injustice of the broken VAT collection system - HE should do something about it - like instruct the pubic servants responsible for HMRC VAT collection - to change policy where needed  :P
 

Offline HwAoRrDk

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Re: HMRC & RoyalMail arrangement
« Reply #5 on: June 19, 2020, 11:14:44 am »
I don't understand what the gripe is here. You order something from overseas with a value over the threshold for VAT-free importation, then complain that you have to pay the due VAT and an admin fee to the delivery agent.

Whether it's Royal Mail, FedEx, DHL, UPS or whoever, that doesn't change the situation - they all charge an admin fee to collect the VAT. In fact, I believe that RM's fee is one of the lowest. I seem to recall other threads on here bemoaning egregiously-high admin fees from other carriers.

If it weren't that HMRC have arrangements with delivery agents to collect import duty and VAT, what would you have them do instead?
 

Online Ian.M

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Re: HMRC & RoyalMail arrangement
« Reply #6 on: June 19, 2020, 11:31:48 am »
It only affects private individuals and small businesses as any VAT registered company can import up to £2000 of goods by post per annum, and defer paying the VAT on the imports till their next VAT return. (See https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad )

Therefore the chances of getting HMRC's import VAT collection system changed in a way that screws individuals less is near zero.  Any changes *WILL* cost you more, as there's BREXIT and COVID-19 to pay for!
 

Offline noreply

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Re: HMRC & RoyalMail arrangement
« Reply #7 on: June 19, 2020, 12:21:02 pm »
I don't understand what the gripe is here. You order something from overseas with a value over the threshold for VAT-free importation, then complain that you have to pay the due VAT and an admin fee to the delivery agent.

Whether it's Royal Mail, FedEx, DHL, UPS or whoever, that doesn't change the situation - they all charge an admin fee to collect the VAT. In fact, I believe that RM's fee is one of the lowest. I seem to recall other threads on here bemoaning egregiously-high admin fees from other carriers.

If it weren't that HMRC have arrangements with delivery agents to collect import duty and VAT, what would you have them do instead?

I guess my ‘gripe’ is that there should be a reset of threshold to trigger VAT collection ...

Currently the threshold level for VAT collection  is GBP15 – which equates to a VAT of GBP3 (20% VAT)

Because HMRC want to collect the GBP3 (based on the GBP15 threshold)
 
– this ‘triggers’ the Royal Mail admin fee of GBP8 (or any other courier with their own fee)

– which happens to be  2.66 times the value of what is being collected   >:(

 
I have absolutely no problem in paying VAT and always happy to contribute to the wellbeing of other’s via the TAX system
-  but I cannot accept such a large disparity – where the cost of collection is 2.66 times what is being collected  |O


How can this be fixed?


Work out what is the minimum cost associated with the administration of collection

– Royal Mail in this case
– their cost of administration for collecting the VAT is GBP8

 
Let HMRC reset the minimum VAT threshold from GBP15

- to a level where the VAT will be AT LEAST 1:1 ratio to the administration fee of collecting it
- preferably better than 1:1 which is 100%, say 20% - or whatever figure HMRC feels is ‘fair’ as a service charge


So, if we make the collection charge vs. what is collected to a 1:1 ratio

- then the new minimum threshold for VAT should be GBP40
- making a VAT charge of GBP8 which equates to the GBP8 for Royal Mail administration charge
- giving us a ratio of 1:1, for VAT collected to cost for the collection


I used Royal Mail as an example
 
– because they would be the main facilitator which HMRC uses to collect the VAT in the UK.


Obviously other shipping companies will have their own administration fees – if at all.


The object here is to move the threshold of VAT to a level where the administration charge for collecting the VAT is not a ridiculous ratio of 2.66 times the value of what is being collected   ::)


 

Offline tom66

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Re: HMRC & RoyalMail arrangement
« Reply #8 on: June 19, 2020, 02:24:26 pm »
Why do they charge £8 fee?

Because of the cost of collection - it is not zero.   For instance I had a dispute with Arrow Electronics over unpaid DDP duties - they screwed up and I got six letters from DHL demanding various, and different payment amounts, and I spoke on the phone with one of their agents at least once.    All of that comes at a cost. 

Perhaps the threshold should be raised, or changed to a flat percentage, but the collection fee is there for a reason.

Just consider it a cost of buying overseas. Post Brexit don't expect this to be any better as you will no longer get VAT included when buying from Europe :(
 

Online Monkeh

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Re: HMRC & RoyalMail arrangement
« Reply #9 on: June 19, 2020, 02:33:36 pm »
Why do they charge £8 fee?

Because of the cost of collection - it is not zero.

But it's certainly not £8. They charge £8 because they're a private company there to make a profit off you, not provide a service.
 

Offline noreply

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Re: HMRC & RoyalMail arrangement
« Reply #10 on: June 19, 2020, 04:47:30 pm »
Why do they charge £8 fee?

Because of the cost of collection - it is not zero.   

Precisely ...


My gripe is not with the 'collector of VAT' - in this case Royal Mail


Sure - it 'costs' something to perform the collection , and like you I have spoken to Royal Mail representative - to ask why precisely GBP8 as their 'flat' figure??


The answer was that this is the arrangement they made with HMRC


Personally I don't see what this has got to do with HMRC, if they are only collecting the VAT for them, why should HMRC be party to determine their administration fee??


Maybe by trying to define what's involved in the collection administration process - Royal Mail can determine a 'profitable fee'.


Anyway - my gripe is with HMRC - because they and only they set the minimum VAT threshold.


So if HMRC knows that Royal Mail is going to be charging GBP8 for the administration of collecting VAT,

then they will also know that by setting the threshold level at GBP15 when VAT 'kicks-in' and thereby triggers the GBP8 administration charge,

then they must also be happy with the 2.66 times ratio of VAT charge to Admin to collect VAT ratio  >:(


This is what's not acceptable  |O


HMRC should not allow 2.66 ratio

- and if they set the VAT threshold higher
- they are not stopping Royal Mail to 'make profit'
- they are simply lowering the VAT collected to VAT collection administration ratio from the ridiculous 2.66
- to let’s say a reasonable level less than 1:1

Hope this make sense  ::)


I know this is a convoluted subject

- but remember
– the issue here is to have a fair ratio and not the ridiculous 2.66 ratio which it currently is at the current VAT threshold level   :palm:
 

Offline olkipukki

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Re: HMRC & RoyalMail arrangement
« Reply #11 on: June 19, 2020, 05:15:19 pm »
I ordered an item from US supplier (value ~ USD25)

...

I might be better off (next time) not bothering in buying anything which is going to be shipped with either USPS or Royal Mail - just jump straight to DHL or FedEx or UPS instead - despite the extra cost - I will get my item in 3 days and won't be hostage to Royal Mail  :P


You can either try and hope a delivery will sneak through as declared $2 stuff fron CN  :-DD, or
 find out that might happen if...  >:D


https://www.dhl.co.uk/en/express/customs_support/duties_taxes/duties_taxes_receivers.html

Quote
Who is liable to pay Duty and VAT charges?
The person receiving the shipment is legally obliged to pay Duty and VAT except where the person sending the shipment has agreed to accept these charges in the contract of sale. Private individuals intending to buy goods on the Internet from non-EU countries should be particularly careful. Often the price advertised on the supplier's website will not include UK Duty and VAT and you will be expected to pay this once the shipment arrives in the UK.

Why do I have to pay Duty and VAT charges and Advance Payment / Disbursement?

We will not be able to deliver your goods to you until we have paid the Duty and VAT charges on your behalf. Some businesses have their own Deferment accounts with HM Revenue & Customs and we merely arrange for their account to be directly debited by Customs. Many other importers, particularly private consumers, do not have an account with Customs. We must therefore pay the charges on your behalf before we can deliver your goods to you. An Advance Payment or Disbursement will be added to your Duty and VAT statement / invoice for clearing the shipment through customs on DHL’s Deferment account.

How much is the Advance Payment / Disbursement I have to pay?
An amount of £11.00 or 2.5% of the total Duty and/or VAT incurred, whichever is the greater.

If the total Duty and/or VAT incurred is less than £440 then a flat amount of £11.00 will be incurred as this is less than 2.5%

For example:
If the total Duty and/or VAT amount equals £125.80, then £11.00 will apply.
The 2.5% will be incurred if the total duty and/or VAT is greater than £440.00. For example, if the total Duty and/or VAT amount equals £490.00 then an amount of 2.5% will apply i.e. £12.25.

These are EU rules, so you can blame them  :popcorn:

P.S.

Fees are part of Rip Off Britain TV show  :-+

« Last Edit: June 19, 2020, 05:17:12 pm by olkipukki »
 


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