VAT from purchase from Jersey (Flat Rate VAT scheme) - The Book-keepers Forum (UK)

Lyndsey · Senior Member

VAT from purchase from Jersey (Flat Rate VAT scheme)

Cheshire · Master Book-keeper

Hi Lyndsey
As it's the flat rate scheme , you cannot claim VAT back on purchases (unless it's for a capital item in excess of £2k on one invoice), so just put nil in the purchases boxes on the VAT return, be it box 4, 7 and 9.

Lyndsey · Senior Member

Hi, It wouldn't be a claiming VAT back, but looks like we are due additional VAT, as it looks like nothing has been applied, if that makes sense.

I normally see this when you get stung importing stuff from America, and it gets stuck at customs and you have to pay the 5p VAT due plus £8 "handling fee...". Just wondering if we have any responsibility to make sure the VAT is correct on this side.

Thanks

Cheshire · Master Book-keeper

Hi Lyndsey
Sounds like the goods are being fulfilled in a different place to where their head office is, so Switzerland in your case. As Switzerland is outside the EU you follow normal import regs, ie generally speaking there will be import duties and import VAT to pay on theses goods arriving in the UK. certain products, some samples and very low value items can be shipped into the UK with no import taxes being due, which is why we can buy things from eg America or China via Amazon that are low value that just land on our doorstep. But if you buy something that is even pennies over that low threshold then VAT becomes due and is then dependent on the shipper stating on the shipping docs exactly what is in that consignment.

The fact that your client is a business and is buying goods in excess of this low value and not seeing any kind of import vat/duty is surprising. How do they arrive - is it Parcelforce? DHL? Other? Do you see the invoices for these companies? Also do you see the delivery bags they come in as the details of the contents and the value apportioned by the exporting company should be detailed on there.

I had a quick look at the exporters site and they clearly state:-
For the avoidance of doubt, you are and will remain the importer of all goods ordered by you and shipped to an address outside Switzerland and will at all times remain liable for any import VAT, Customs or other duty chargeable thereon. For purchases by UK businesses, no evidence of payment of UK import VAT can be provided.

For much larger shipments and STANDARD VAT you would normally pay a shipper for the customs and VAT against their invoice and claim it back via the C79 from HMRC. Parcelforce and DHL have slightly different arrangements whereby you can claim the VAT back from their invoices (no C79 will be produced as these are low level value imports normally).

Lyndsey · Senior Member

Thanks Joanne,

I've just spotted that bit on their webpage

"Shipping, Handling, Customs and VAT

UK deliveries
The prices payable for goods as set out in the website are, inclusive of applicable taxes and shipping/handling costs. Delivery is included for deliveries in the UK.

Consignments imported by individuals to the UK of a value of £14.99 or under are relieved from import VAT and duties under current legislation.

For the avoidance of doubt, you are and will remain the importer of all goods ordered by you and shipped to an address outside Switzerland and will at all times remain liable for any import VAT, Customs or other duty chargeable thereon. For purchases by UK businesses, no evidence of payment of UK import VAT can be provided.

This site is not able to take orders for delivery to territories other than the UK. "

So prices are inclusive of applicable taxes, however, the purchaser is responsible for import VAT. For an every day consumer, you see a note saying all applicable taxes are included in the price, however, they could be stuck with import VAT chargeable. About as clear as mud to me!

No I have not seen any packaging other than the invoice/receipt, which has a 0% for VAT. They would have mentioned if they had to pay VAT fees on top of price paid.

Its not like they are intentionally "importing", they have probably just picked the cheapest ink cartridge on google.

I am in a mind to order some cartridges for me personally, to see what comes on the packaging, whether there are any duty stickers etc.

Thanks Lyndsey

Lyndsey · Senior Member

I've just had a thought, would the £15 for VAT exemption be per item? As each cartridge is under that figure?

Had a quick look through the website and the larger cartridges (£40 per item) specifically states inc VAT in brackets underneath, so I presume you would have to pay that figure and not the advertised amount.

The unit prices for the items we have are around £8, but he has bought multiple.

Cheshire · Master Book-keeper

The £15 is actually for individuals not businesses.

The invoice is not a vat invoice. It's a commercial invoice for the purpose of export/ import. ''Commercial invoice'' is a not an ordinary business invoiceas we know it, it's a documentary collection item coved in export regs.

Usually the £15 is NOT per item, if you look at HMRCs website they mention the small figure under which you can import VAT free and it's per consignment, unless it's coved by the low value bulking of items, but this is only available in certain circumstances and for (I believe) certain commodity codes, which would be declared at entry level. The details would be on the SAD (c88) form accompanying the import.

So, unless they thought he was an individual, plus using the above or indeed posted as separate consignments below the personal threshold, he would be over the threshold of it attracting import VAT as it arrived, not to our shores as usual (see below) but then I would expect you to see such commentary on the commercial invoice, plus several copies of the commercial invoice to support each consignment.

or or unless they lied about the contents so it fell inot a import vAt free category.

The vat inclusive price of the other items you mention can only be if the item is being fulfilled within the UK to the UK, I would suggest (I say this without having looked further into their business model.). Or you may well be paying local Swiss VAT as well as the then import VAT.

I also suspect that the reason the others are fulfilled from Switzerland is to do with price points.

NB I have not checked to see if the actual specific product he has bought is VAT free ( I suspect not, but it depends on the specific of the component and it's commodity code).

The supplying company does NOT have to include the VAT on their invoice if this is an import into the UK, it is for your client to pay.

I would suggest you try to get hold of the packet it came in with.

Not sure if you have got to the Bank statement yet, but are there any odd entries that you haven't got paperwork for a few ££ to some shipping company, two mentioned above are the popular ones, but there are lots more small less obvious ones. Might just look like a postage charge, for which you have no paperwork handed over by your client yet? Or did your client pay iIt personally and has lost the paperwork? (Maybe your clients aren't as bad as some of mine!!). Or is this a one off he has got away with due to the ineptitude of some member of staff at the shipping co?! The SAD form (c88) would be with this shipping company invoice.

To cover off a point you raised last night on another forum (and to keep a consistent answer on here for anyone else reading this) the goods would NOT be stopped at customs as you think of it in the normal way as normal imports would be ( and involving the usual c79 import process) because they are not coming in by sea or air, but instead would arrive at the customs warehouse of whatever postal service is delivering the items as they are acting as the customs agent for this deal, so they are the ones who should be collecting the customs vat and, as you say, the usually comparably extortionate admin charge. This is the ONLY time you would be able to use a shippers invoice to reclaim the VAT as you wouldn't physically get the C79.....had you been on standard VAT.

if you want me to add supporting links for any of the regulations I've mentioned, let me know and I will.

-- Edited by Cheshire on Friday 14th of October 2016 08:50:12 AM

Cheshire · Master Book-keeper

Just a thought, some Jersey companies offer VAT prepaid (might have the wrong terminology there) on certain goods if fulfilled in Jersey and below certain t&s holds, so that might cover the £40 items, although I seem to recall from the quick glance I had of their website yesterday that goods are fulfilled via the Uk too. Can't recall and gotta go out now.

Lyndsey · Senior Member

I've just spoken to them directly. Apparently they split any order into small enough packages to be under the low consignment limit. I can see on the two invoices that the Â£20 was split into multiple delivery's. Costly on delivery but getting them out of UK VAT. Sounds a little dodgy to me, I may just guide my client away from them. He is normally really good and listens to me. Oh yes I have seen all bank statements and nothing additional on there and he lets me know if he pays anything himself, doesn't want to lose money by not advising me! Thanks for your help It really intrigued me as to how they were working this. I've never really don't importing other than the odd bit my husband bought from US and got stuck with handling fees on a tiny amount of VAT

Cheshire · Master Book-keeper

Ah right, so at least the commercial invoice issue is working, I probably should've just asked you for a copy. ALTHOUGh the fact that the import is being split should've been picked up by the import agents at the shipping company so that import VAT is actually payable during the process. This split consignment issue is common, but usually with big volumes imports and exports.

So yes they are certainly bending rules and seemingly getting away with it, although the fulfilment through Switzerland is not against the law, it's a legal loophole they have found which will no doubt be plugged at some point, same as the VAt free imports from Jersey was a few years ago.

Happy to help with any import Qs when I can.....I have had my own business importing from China and Italy, look after (accountancy) clients who are major importers and worked in Corproate finance where one of my specialisms at one point was International trade finance.