VAT has always* been payable on top of the cost price, carriage and duty for items over a certain price coming from non EU overseas, it's just that that now applies to EU purchases too. Before Brexit you'd have paid VAT in the country where you bought the item, now you don't but you do pay duty and VAT when you 'import' it, just as you would have buying from the US pre-Brexit.

A Thomann purchase would have had 19% German VAT included in the price and the carriage charge, now that won't be the case, in practice stuff will be 2.5% dearer to account for import duty and another 1% 'cos of the 20% UK VAT rate.

* for several years at least

uselessoldman wrote:I am trying to get my bro in the USA to order me some stuff from China and send it to me as a present, I am hoping his might get round the SCAM

Gifts attract VAT and duty (where applicable), too: https://www.gov.uk/government/publications/notice-143-a-guide-for-international-post-users/notice-143-a-guide-for-international-post-users
I've always found importing stuff to be a bit of a potluck exercise so assume that it'll get charged when determining if something is good value.
Not something I've bothered with in recent years, as the GBP/USD and GBP/EUR rates aren't exactly favourable these days...

Watch out for credit card fees as well.

https://www.bbc.co.uk/news/business-55796426

Going the other way. I regularly send small items, electronics, tea bags Heinz beans to my son in France and it has always been my practice to use unmarked packaging so that some low life does not think "Ooo! I could do with a new mic!)
Now I have to attach a label announcing the nature of the contents and their weight.

Dave.

I'm not sure I describe it as a 'scam' any more than any other form of taxation (not saying I like it mind you but taxes have to be paid and collected). If you buy, say, a guitar from overseas you should be able to avoid paying local sales tax/VAT, the trade off is that you have to pay VAT when it arrives in the UK. Import duty, as I understand it, is more a tool the government use to make foreign made stuff a bit less attractive than local UK made stuff.

I'm not sure I describe it as a 'scam' any more than any other form of taxation (not saying I like it mind you but taxes have to be paid and collected

Agreed, taxes have to be collected by the government, but taking 20% of your turnover, up front and regardless of your profitability, is certainly a ‘racket’.
If your profit margin is small then once you exceed the VAT threshold you’ve got to do a lot more turnover to increase your profits.

That's certainly an interesting view of VAT and of viable business ;-)

The scam is the setup where couriers can charge you any admin fee they want, they will only learn if people keep refusing the parcels. I don't see any reason why HMRC can't accept direct payment before releasing items from customs.

That's certainly an interesting view of VAT and of viable business ;-)

Call me old fashioned, but I think you should work out your profit for the year and then be taxed on that figure accordingly.

MOF wrote:Call me old fashioned, but I think you should work out your profit for the year and then be taxed on that figure accordingly.

That's corporation tax. VAT is a tax paid by your customers and, if they're a business they'll be able to claim it back. It certainly isn't 20% of your turnover. In fact, I was VAT registered for quite a while, despite being well under the threshold, because it allowed me to claim the VAT back on things I bought and my biggest customer was also VAT registered so they could just claim the VAT back on my charges.

MOF wrote:Call me old fashioned

I think 'confused' might be a better adjective. ;)

I think you should work out your profit for the year and then be taxed on that figure accordingly.

As James says, that's Corporation Tax.

VAT is, essentially, an end-user purchase tax, added on to the cost+profit of your product or service.

It effectively taxes people on what they 'consume' or acquire, as opposed to taxing people on what they earn. So those who consume more, pay more tax... As taxation goes, I don't personally think that falls under the category of 'scam'.

Any VAT-registerd business simply collects that tax when people purchase its eligible products or services, and (eventually) passes it back to HMRC.

And the business doesnt have to pay VAT to HMRC 'upfront' as you claim. There are a couple of different ways of paying VAT, and I suspect you're referring to the 'cash accounting' scheme which offers some business worthwhile benefits, but penalises others. The traditional method is available to all, though, and requires payments on a quarterly basis, with the balance from each quarter's actual sales coming due 40 days after the end of the quarter -- so between 40 and 130 days after collecting it!

uselessoldman wrote:Years gone past I have bought guitars from EU CHina and USA and paid the 4% import duty NOW they want an extra 20% VAT on top !!! This includes second hand and no matter whether its complete or in pieces as this was one way round the import duty. I can understand the logic BUT its a killer cos its going to increase prices of kit based here in the UK since its less competitive buying direct from China etc as I have done before. Even if you go abroad and buy it, customs are going to demand you pay import duty and VAT on goods you bring back.

I am trying to get my bro in the USA to order me some stuff from China and send it to me as a present, I am hoping his might get round the SCAM

Careful as you do have to pay customs on presents costing over £15 unless they recently changed that.

It certainly isn't 20% of your turnover. In fact, I was VAT registered for quite a while, despite being well under the threshold, because it allowed me to claim the VAT back on things I bought and my biggest customer was also VAT registered so they could just claim the VAT back on my charges.

If you do business to business then yes you can nett off your VAT, but the real problem comes when you’re selling to the public and you’re competing with non VAT registered traders who can afford to charge the same or slightly less than your VAT inclusive price and make <20% more money than you.
I read recently that new rules on e-commerce VAT (notably Amazon and E-Bay) saw a sudden jump in prices, this flagged up lots of ‘companies’ that were charging for but not paying over the VAT on mostly chinese imported goods apparently, they were using false VAT numbers that hadn’t been carefully checked.
If you are registered but having a difficult time trading you still have to pay VAT quarterly and that might bankrupt you whereas payment in arrears on actual profits seems much fairer to me.

MOF wrote:If you are registered but having a difficult time trading you still have to pay VAT quarterly.

That *IS* payment in arrears.

You only have to pay back VAT if youve charged it to your customer.
eg You Invoice Jan, Feb, Mar & collect the dosh , then VAT calculated in Apr and you cough up payment early May. Its almost like a free Gov loan to assist your cash flow.

note that todays "pay EU VAT/ Claim EU VAT back" is a retrograde step. When we were in the EU there was a scheme where you didnt pay EU VAT and didnt Claim EU VAT back. The supplier put the details & your VAT number on a central EU register & it all worked itself out with no paper work or pre-payment required.

China wtf ????: Aliexpress tells me "these goods not shipped your area" ???
{plastic knobs, they were quite happy to sucessfully ship my area in Nov }

You only have to pay back VAT if youve charged it to your customer.

If you’re VAT registered you have no choice but to charge it.
If you trade below the VAT threshold but have chosen to register you can de register but that can’t be done retrospectively.

Yes VAT payments each quarter are in arrears but they eat into cash flow especially as you most likely won’t have received the monies for goods sold in the most recent month or the whole quarter when that involves goods and/or services to other companies that usually expect to pay quarterly.