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VAT payable on US gear brought into UK?
Old 27th August 2007
  #1
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VAT payable on US gear brought into UK?

I'm thinking of getting the SYTEK MP4 pre which they will ship to me in UK for about $1000.

I'm trying to find out the VAT position on bringing this into the UK. I don't want to be stung with an extra 17.5%.

I've tried the HMRC website but its useless for finding specific stuff.

Can anyone help me?

Cheers

Iwan
Old 27th August 2007
  #2
Lives for gear
I have no idea what a Sytek MP4 is, they do not seem to be sold in Europe, but the answer is yes, you will have to pay import duty (c.a. 8%) a courier service charge may be added for the task of sorting out that import duty, and of course you have to pay 17.5% VAT on top of that.

Over and above that, you may have to adapt the item for 240V supply.
Old 27th August 2007
  #3
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Barish's Avatar
You'll pay that VAT no matter VAT.

But you know VAT...

If you have a VAT-registered friend, get the item invoiced to him and make sure the sender puts your friend's VAT number in the address box. Like:

Wayne & Eastwood Associates (Plumbing) Ltd.
VAT No: GB 123 4567 89
The village with the longest name
Wales
Post Code
UK

This way you can claim the VAT back through your friend's accounts at the end of his quarterly VAT return.

Just a thought.

B.
Old 27th August 2007
  #4
Lives for gear
 

Cheers,

They're modding it for me in their factory for UK psu.
I wasn't aware that anyone was selling these outside the US, plus the exchange rate makes american prices tempting.

Mind you not so much when you consider it'll cost abut 25% in taxes to bring it in.

hmm
Old 27th August 2007
  #5
Lives for gear
 

Barish, thats fraud mate.

I don't want to get in to that.
Old 27th August 2007
  #6
recall, find one cheaper. They go regularly for $600 or $700 so you'd probably be at $1000 USD after shipping + VAT.
Old 27th August 2007
  #7
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Barish's Avatar
Quote:
Originally Posted by recall View Post
Barish, thats fraud mate.

I don't want to get in to that.
No it's not. In fact, your intention of not wanting to pay VAT upon importing it without a legal stance is an intention of fraud. Mine is perfectly legal.

The item has been legally imported. Importer is a VAT registered business. He paid the VAT to the Customs & Excise and put the item into his books as a stock item or a fixed asset or whatever. He claimed the VAT he paid for it at the end of the quarter, just like any other VAT'able item he may have purchased for his business in that time.

That's all C&E needs to know. It's none of their business how your friend lets his fixed assets be used by other people. If there is a money transaction between you both, then it's all together a different story. But no money exchange, no tax. You do not need to report Inland Revenue how many favours you've done to who through your business.

The item legally belongs to your friend, but you use it. After four years, he can drop the item from his fixed assets list as worn-and-torn scrap and that's it. If you really want to be thorough about it, then he invoices you a symbolic £1 a year rental invoice and you pay him that. At the end of 4 years, he sells you the item for £1 as scrap and you own it from then on.

If you ever wish to sell that item before 4 years period, the taxman will want a VAT charged on its sale price, plus your friend's accountant will have to return the tax reclaimed on it as a fixed asset so far, for your friend will have claimed its original import value against his earnings at the end of the tax year, spread over legal four years period.

Perfectly legal. If you don't believe me, ask an accountant.

B.
Old 27th August 2007
  #8
Gear Nut
 
ootle's Avatar
 

The friend with the VAT-number, he puts the bought stuff in his books. How does this go out of his books again? Not?
I hope he doesn't have a lot of friends. That would bring him huge stock, and no sales: taxmen over here don't buy that trick no more (they used to).

About taxes when you buy stuff: the shipping company will charge you for:
- transport costs (or shipper will have to pay, make sure you know who is paying, because this can cost a lot).
- a handling fee
- I believe this product would be 4 percent of import taxes, but you could check.
- VAT over the total amount.

Regards,

John van den Oetelaar
Old 27th August 2007
  #9
Moderator
 
toolskid's Avatar
 

You can also contest the spurious admin charge levied by the courier companies

I have done this sucessfully many many times.

They almost always waive it!
Old 27th August 2007
  #10
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Barish's Avatar
Quote:
Originally Posted by ootle View Post
The friend with the VAT-number, he puts the bought stuff in his books. How does this go out of his books again? Not?
Are you sure you have read the part that mentions about the 4-year period?

M.
Old 28th August 2007
  #11
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Santiago's Avatar
 

If in doubt, email HMRC. I did that when I bought my sonica labs laptop.

HMRC got back to me within a day with all the info, which turned out to be really accurate.

Hope this helps,

Santiago
Old 28th August 2007
  #12
Gear Nut
 
ootle's Avatar
 

Quote:
Originally Posted by Barish View Post
Are you sure you have read the part that mentions about the 4-year period?

M.
Yes, I did, but I still don't understand: after 4 years he 'supposedly' sells the gear without the VAT. The money he 'supposedly' gets for it, has to be booked, or? But he doesn't receive it.....
Could be that upon reception of the goods he pays for it out of his business money, gets money from his friend that he keeps for four years (out of books), then after 4 years 'sells' the stuff and gets the money out of the closet.

All good,
J.
Old 28th August 2007
  #13
Lives for gear
You are both right and both wrong.

1. Barish is right, because the item is written off. Many technical items like computers and other digital boxes are just written off as worthless after a certain period and end up in the bin.

2. ootle is right, because the scam just does not work. C&E inspectors are not idiots. Plumbers do not import stuff from the US. Any simple accounts audit would throw that item up and the inspector would ask to see the item. If the item is then myseriously not there, then the inspector would have to impound the books and the plumber would face possible criminal proceedings.

If our plumber friend (or anybody else come to that, including recoding studios or PA companies) import stuff VAT-free and the VAT returns will always show that (there would be no point doing it otherwise!) then a ltlle computer programme raises your audit profile. Keep doing it and getting audited become a bloody certainty!

As a business, you are acting as an agent for Customs and Excise and therefore have already agreed to allow them to inspect you and all your books and buildings at any time without warning or set reason.
Old 28th August 2007
  #14
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Barish's Avatar
It's none of their business Andy, believe me.

I phone up the Inland Revenue and say that I decided to also operate in audio gear rental, just get it on record, which doesn't cost me anything, -which is not even necessary if you are a limited company as they are totally free in which area of business they want to operate- and then import the goods, pay the VAT, put it through my system and then rent it to my friend for £1 a year. And my friend doesn't pay me that £1 and I write it off at the end of the year as bad debt.

What is Inland Revenue going to do about that?

If there was anything they could do, no business would go bankrupt because there would be no such thing as "bad business decision". Each business decision would have to go through IR first, which is not the practice in this part of the world in the past say 2000 years.

And it's very hard to prove whether it was intentional or unintentional, and who is going to prove it for what reason anyway?

If it was a bank loaning the money, they could pull the plug on me and that's understandable, but it's not IR's money that I am investing. They can only claim a share on it as soon as it generates an added value, which it doesn't in this case.

B.
Old 28th August 2007
  #15
Lives for gear
Quote:
Originally Posted by Barish View Post
It's none of their business Andy, believe me.
Customs and Excise think it is their business, because there are a great number of small traders who believe this scam works and sooner or later, they end up in prison. The lucky ones just get fined.


Quote:
Originally Posted by Barish View Post
What is Inland Revenue going to do about that?
Fine you or hand over a file to the Crown Prosecution Service. They have the power to levy a fine, without recourse to the courts.

Quote:
Originally Posted by Barish View Post
And it's very hard to prove whether it was intentional or unintentional, and who is going to prove it for what reason anyway?
They do not have to prove anything. YOU have to prove that the item is a genuine item of trade for your business.

Tax and import duties work the other way about. As a trader, you are obliged to maintain a full set of accounts that may be inspected and even impounded at any time without notice.

This is not criminal law, but tax law and the obligation of proof lies with the company. That is what accounts are there for!

If the IR or C&E believe that fraud has taken place, then, if they push for a prosecution, they have to be able to prove their case, just as any other prosecuting body must do.
Old 28th August 2007
  #16
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Barish's Avatar
They could do that with any purchase.

A friend of ours, who owned a toy distribution company with his wife here, was accused of putting their holiday expenses in Hong Kong through their books, although they were primarily there for a toy exhibition. They obviously spent a few days more after that while they were there, which everyone does anyway. (I had even witnessed executives putting through their late-night dodgy channel view charges in hotels as their accommodation/executive entertainment expense when I was working for PCI. Anyhow...)

At the end they proved that it was not a hubby-and-wife holiday in Far East, but rather was really a business trip and they went to see some facilities after the exhibition was over, -which was not so difficult to prove- but the taxman who went after them denied that his judgement was wrong all throughout, and insisted that they were a couple and it was a cover up of their annual holiday, which caused the case to drag on some two years. Finally his boss accepted that his judgement was wrong and the case was dropped. Luckily my friend had an indemnity insurance so they were covered for all the legal expenses, but the a££hole who made the wrong assesment and almost caused them to go bankrupt got away with it. He was given on another case and probably went on to burn some other guys too, may be not.

But as I said, it can happen in any legitimate business. They don't need a false declaration to really pick you on. The guy can't get a shag from his wife the night before, and the next day you are done instead.

And also the example address up there was a mere example. If I said Wayne & Eastwood (Productions) Ltd., probably you wouldn't have gone that far to say IR would come after them for an overseas gear purchase.

B.
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