Wednesday, September 23, 2009

Taxed to the hilt


is why it is no longer economic for us in the UK to order small ham radio accessories from the USA.

Look closely. The declared value is $30. The VAT is £2.72 - roughly $4.50, or 15% of the value. No problem there. But then there is the Royal Mail International Handling Fee, which is £8.00 ($13.20). So this $30 item ended up costing nearly $50, because we're charged three times the cost of the tax for the privilege of having it collected from us!

It's legalized robbery, isn't it?


Anonymous said...

Julian, You were really unlucky with your customs experience. Using the exchange rate calculted from your figures, if the declared value had been 30 US cents less i.e. $29.70 then you would not have been charged anything at all! See following extract from HM Revenue & Customs website.

If you buy goods online from a country outside the European Union, for instance the USA, Canada, China, Australia
You will be charged:

Customs duty if the amount of duty is €10 (£7) or over
Import VAT if the value of the goods is €22 (£18) and over
Excise duty for some goods like alcohol and tobacco

Once there is no charge from Customs, there is no delivery charge from Royal Mail either.

Best regards Maurice G4DVM.

Unknown said...

Thanks Maurice. It's annoying that the amount is just over the limit. Unfortunately I had already ordered this particular item by the time you originally pointed this out to me.

I'm not objecting to having to pay the VAT, it's having to pay a flat rate administration charge that amounts to three times the amount of tax I'm complaining about. Either the threshold should be higher or the collection fee should be a percentage of the tax, though I object to paying for the "privilege" of paying tax, in principle.

I see from the Customs document you referred to in private email that it is possible for EU buyers to pre-pay VAT at the time of purchase. However most of the American ham radio accessory suppliers are small businesses that don't do the volume of overseas sales or have the systems in place to deal with this.

When purchasing electronically deliverable products such as software over the web using specialized services like ShareIt, RegNow etc. EU buyers are automatically charged VAT whether they like it or not. It's a pity that similar services such as PayPal which so many small businesses use could not offer a similar service, collecting the VAT at the time of purchase and allowing the vendor to send packages with a label indicating that the tax was paid, thereby avoiding the cost of collecting the tax at this end.

I will no longer be purchasing items in the $30 - $100 range from the US in future unless I can pre-pay the tax and avoid the collection fee.