The Chinese already found a loophole, but is it legal?
So recently I’ve had two new and interesting experiences with orders off both amazon and ebay. Both sellers claimed to be based in the UK. Both had valid UK VAT numbers that matched up.
Both items took 2-3 weeks to arrive, from the “UK”. And indeed, they had royal mail 24 postage labels on them with a return address that went to some UK fulfillment centre. But on the back of the parcels, they also had a Chinese CN22 form with a low value (they were authentically under £5 each), but the CN22 date matched my order dates, weeks earlier.
Edit: it turns out royal mail does royal mail 24 labels for the chinese, and it may be one of these royal mail labels coming from China. Still slightly confused though, because seller is UK VAT registered and this item should have come from the UK. It has low value and actually came from china… so no duties and no vat?
So what they’re doing is sending from China to a UK warehouse with a low value CN22. Then, after arriving at this UK warehouse with no VAT due, the items are forwarded to the customer as being sent ‘from the UK’. VAT does not have to paid since the CN22 shows low value.
You’ve got to give it to them, quite creative! But how is this legal?
36 replies
Seller_EHYOwAkoZV3Hb
What you saying doesn’t make sense to my simple mind.
The payable vat is on the sale price so assuming that all sales are properly declared (a big if) then vat is being paid.
Maybe I’m missing something.
Seller_0pkMTMROIPEmY
This is part of a very major problem at the moment, UK/EU VAT Fraud, we are still awaiting publication (due 28th April 2018 overdue) of the agreement between Amazon / Ebay and other marketplaces with HMRC, where the marketplace will report data directly to HRMC to verify what VAT should be paid based upon the actual market place sales data. It is clearly going to happen at some point as Amazon have gone through a very lengthy and somewhat painful process with legitmate sellers having to verify their accounts and VAT numbers. Part of this process is the fully verify the sellers account and business status match fully to then report out to HMRC. I would expect at some point there will be numerous posts of accounts being suspended as a result of enforcement action by HRMC.
Despite this there are large number of sellers selling products via Amazon and Ebay that are in clear obvious breach of UK VAT law - time will tell.
Seller_2BrPSydGy6oyq
They are avoiding paying import duty due to the low value of individual orders, which if shipped direct from China would not attract import duty anyway, but as they are VAT registered in the UK and the sale takes place on a UK site, then they will pay VAT on the sale, or will be expected to by HMRC.
Seller_IrrT3qqjFRDov
The value of the VAT payable on this sale is what you paid on Amazon/Ebay, and not the value of the product you bought.
Misdeclaring the value of the product to avoid import tax is of course illegal, but goes on for sure. If say you bought something for £100 on Amazon and they imported it claiming its worth £1 - that should attract some attention from the HMRC.
If its a low value item as you suggest and somehow can get into to the UK without paying tax then there is nothing wrong with that. Resending in the UK doesnt attract more VAT, that value would go back to your original purchase.
Seller_uWSEZqEIlhnzj
I think you are missing the point here,
-
Declaring lower value is illegal and they should not do this. If they declare correct value then the buyer must pay correct VAT / Duty to import [ There is no legal duty to the seller in this case if the value is correct ]
-
If the business is registered in the UK but they are sending stock from China , in this case NO VAT IS DUE. VAT is only payable if the item is located in UK and dispatched from UK.
I hope this clears your doubt.
Thanks
Seller_uWSEZqEIlhnzj
@Kitty
- What is your basis that they have sent the item to UK warehouse ? Royal mail provides direct delivery from China / HK to UK using royalmail services. So if you have received a mail with royal mail stamp on it , Does not prove that it is coming from UK , it simply means it is delivered by royal mail , Unless i am missing something here or you are 100% sure about this.
3, If they are advertising as UK warehouse and sending item from China then this is a issue of ebay/buyer and seller , However there is no legal complication here with respect to VAT
Please check below link
https://www.royalmailgroup.com/media/press-releases/royal-mail-and-aliexpress-link-chinese-exporters-and-uk-online-shoppers
[ Chinese exporters will be able to supply goods for UK delivery within two weeks, much faster than standard international postage from China. ]
Please let me know if i miss anything
