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HMRC propose scrapping UK VAT free imports and force marketplaces (like Ebay & Amazon)to collect VAT

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HMRC propose scrapping UK VAT free imports and force marketplaces to collect VAT

https://tamebay.com/2020/06/hmrc-propose-scrapping-uk-vat-free-imports-force-marketplaces-collect-vat.html

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HMRC plan to scrap UK VAT free imports and force marketplaces to collect VAT on sales for overseas sellers by the end of the year, according to consultation document seen by the FT. Although an informal consultation documents, “key design features” of the plans were not up for negotiation and there is a strong intent to bring the rules in from the 1st of January 2021.

This will send a shock wave through the ranks of Chinese sellers who are accustomed to UK VAT free imports. Over the past years we’ve seen everything from marking items as gifts, under-declaring the value to be below the £15 level where no customs duty or Import VAT is due, moving goods to UK warehouses but not paying VAT, being clobbered for VAT and moving fulfilment back to China and a whole raft of other measures to dodge expenses which UK sellers have to pay.

UK VAT free imports on goods under £15

Scrapping UK VAT free imports for low value goods would bring relief to many within the UK who also face higher postage costs than overseas sellers. It can be significantly cheaper in many countries, even with the cost of air transportation, to post an item from outside the UK than within the UK...

 

Edited by Saving For a Space Ship

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1 hour ago, PeanutButter said:

And how much money have we lost by allowing this to continue unchecked for years? Still, better late than never. 

OR.......How about scrapping VAT altogether!?

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VAT is paid to the country where the customer is located, including distance sales

This whole thing is very problematical though. It basically tips the market massively in favour of the big multinational organisations and away from small independents.

Its no problem for Ebazon to have a VAT-registered subsidiary in every country they operate in. How would that work for Dave's Hand-made Widgets with a turnover of £50k a year?

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2 hours ago, anonguest said:

OR.......How about scrapping VAT altogether!?

This is the only fair answer.

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I have no objection to paying VAT on smaller imports, so long as it doesn't end up like the current situation for goods/postage > £25 where you end up with a £10-15 fee on top of the VAT, as the post office/Fedex/whoever take their cut and charge for "administration". No doubt there is a ridiculous level of low-level fraud now with packages with mislabeled value coming in - as in, every eBay or AliExpress parcel from China.

 

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14 minutes ago, mattyboy1973 said:

I have no objection to paying VAT on smaller imports, so long as it doesn't end up like the current situation for goods/postage > £25 where you end up with a £10-15 fee on top of the VAT, as the post office/Fedex/whoever take their cut and charge for "administration". No doubt there is a ridiculous level of low-level fraud now with packages with mislabeled value coming in - as in, every eBay or AliExpress parcel from China.

 

That is precisely what will happen. The solution, as intended, is to buy local.

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1 hour ago, erat_forte said:

This whole thing is very problematical though. It basically tips the market massively in favour of the big multinational organisations and away from small independents.

Its no problem for Ebazon to have a VAT-registered subsidiary in every country they operate in. How would that work for Dave's Hand-made Widgets with a turnover of £50k a year?

I guess there aren't that many Dave's exporting cheap widgets out the UK or just selling domestically as China can supply for less even allowing for import vat+carriers fees already. Sad that this is the case unless Dave is importing undervalued widgets in and reselling.

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4 minutes ago, Peter Hun said:

That is precisely what will happen. The solution, as intended, is to buy local.

If, by that, you mean buy exactly the same product for 5x the price from a local distributor then yes.

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9 minutes ago, nightowl said:

I guess there aren't that many Dave's exporting cheap widgets out the UK or just selling domestically as China can supply for less even allowing for import vat+carriers fees already. Sad that this is the case unless Dave is importing undervalued widgets in and reselling.

Right... either is possible. But it's a economy of scale thing, at the moment there is a possiblity to be a small independent using online sales to export worldwide. This proposed VAT change would kill that dead.

They already done it with electronic downloads, I knew people who made good money selling technical data sheets / instructions / course materials. Build a website, take online payments which unlock a PDF, mp3, or other file download. Then the rules changed and for all downloads you have to charge VAT in the customer's jurisdiction, basically that whole business model died, you either have to sell that kind of thing through a big multinational e-publishing platform (who take a fat cut as well as acting as a "gatekeeper") or just slap it online for free.

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3 minutes ago, erat_forte said:

Right... either is possible. But it's a economy of scale thing, at the moment there is a possiblity to be a small independent using online sales to export worldwide. This proposed VAT change would kill that dead.

They already done it with electronic downloads, I knew people who made good money selling technical data sheets / instructions / course materials. Build a website, take online payments which unlock a PDF, mp3, or other file download. Then the rules changed and for all downloads you have to charge VAT in the customer's jurisdiction, basically that whole business model died, you either have to sell that kind of thing through a big multinational e-publishing platform (who take a fat cut as well as acting as a "gatekeeper") or just slap it online for free.

Surely the larger organisations charge vat too?  And don't sub £80k minibusinesses not charge anyway.

Incidentally I think encouraging the Daves widgets type businesses should always be prioritized over supporting larger corporates anyday if only to keep the 'free' market healthy just I'm never really sure how to best do it.

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30 minutes ago, Peter Hun said:

That is precisely what will happen. The solution, as intended, is to buy local.

And that's not a bad thing either. Most imports are tax and wage arbitrage plays, which impoverish the purchaser over time. 

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56 minutes ago, erat_forte said:

Then the rules changed and for all downloads you have to charge VAT in the customer's jurisdiction, basically that whole business model died, you either have to sell that kind of thing through a big multinational e-publishing platform (who take a fat cut as well as acting as a "gatekeeper") or just slap it online for free.

The first part is true, but there are plenty of online payment services companies out there who will handle all of this for you, for a (fairly) reasonable fee. I pay just over 5%, which includes credit card transaction fees, all risk analysis, VAT collection for any jurisdiction etc. Handling all of this yourself is tough, verging on impossible and definitely not economic for small players, but that was true to a certain extent before the VAT changes came in anyway (you still had to handle credit card fees, user data, GDPR, data protection etc, or get another company to do it all for you).

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1 hour ago, mattyboy1973 said:

If, by that, you mean buy exactly the same product for 5x the price from a local distributor then yes.

Which is one of the benefits of controlling our own borders.

38 minutes ago, stuckmojo said:

And that's not a bad thing either. Most imports are tax and wage arbitrage plays, which impoverish the purchaser over time. 

Indeed local manufacturers can start selling things made by UK workers. The cheap eBay tat imported from China will go. Prices will go back to the old levels and the increased cost to the consumer will reduce the excess cash people have to jack up the cost of houses.

When house prices were low, it was because people didn't have the money to raise prices higher.( Don't know how this relates to lower food costs from the world, as it will devastate UK farmers, but ho hum, cheaper chicken)

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Ah. VAT. The tax on proles that keeps on giving!

Socialist Sanders wanted a transaction tax at 0.5% on stocks, 0.1% on bonds, and 0.005% on derivatives and city trader types went mental.

Let's kill small traders instead.

 

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27 minutes ago, Peter Hun said:

When house prices were low, it was because people didn't have the money to raise prices higher.( Don't know how this relates to lower food costs from the world, as it will devastate UK farmers, but ho hum, cheaper chicken)

So your argument in favour of higher prices for everything (except houses) is that it will bring house prices down? There is a connection IMO, but only insofar as rising prices for everything else will/should actually count as inflation, and we'll get higher rates, which are the real drivers of HPI.

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13 minutes ago, mattyboy1973 said:

So your argument in favour of higher prices for everything (except houses) is that it will bring house prices down? There is a connection IMO, but only insofar as rising prices for everything else will/should actually count as inflation, and we'll get higher rates, which are the real drivers of HPI.

No, its mere a side effect. The desire is to raise the cost of consumer goods so that UK companies can manufacture them and provide UK jobs. The side effect is we will go back to 1970's level of living and house prices. Even cheaper food will party compensate (food cost twice as much in the 70's),

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40 minutes ago, byron78 said:

Ah. VAT. The tax on proles that keeps on giving!

Socialist Sanders wanted a transaction tax at 0.5% on stocks, 0.1% on bonds, and 0.005% on derivatives and city trader types went mental.

Let's kill small traders instead.

 

An accountant who worked for very high net worth individuals pointed out to me that VAT is the only tax the rich have to pay.

Agreed, though, its petty vindictiveness against the plebs.

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5 hours ago, byron78 said:

Ah. VAT. The tax on proles that keeps on giving!

Socialist Sanders wanted a transaction tax at 0.5% on stocks, 0.1% on bonds, and 0.005% on derivatives and city trader types went mental.

Let's kill small traders instead.

 

Because trading would just shift to Singapore, Geneva and new york... So what's the gain exactly? Better to have it local so you tax the salarys of people doing it at 45% plus ER Ni and all the rest of it. 

Consumption taxes should be across the board. The vat limit is 85k for turnover so very small buis are excluded. 

In addition frankly the admin for most is pretty minimal even with latest submission rules. 

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21 minutes ago, captainb said:

Because trading would just shift to Singapore, Geneva and new york... So what's the gain exactly? Better to have it local so you tax the salarys of people doing it at 45% plus ER Ni and all the rest of it. 

Consumption taxes should be across the board. The vat limit is 85k for turnover so very small buis are excluded. 

In addition frankly the admin for most is pretty minimal even with latest submission rules. 

Maybe. That's the classic retort for not reimplementing them isn't it?

Have to say, they didn't send traders scuttling overseas back in my day though. Financial transactions taxes were the norm in the 50s and 60s (in fact they were doubled after The Great Depression as I remember).

We already have a tax on trading uncertified stock as well (the Stamp Duty Reserve Tax). That's 0.5% (or it was when Thatcher brought it in), and doesn't seem to have driven much abroad either.

 

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2 hours ago, byron78 said:

Maybe. That's the classic retort for not reimplementing them isn't it?

Have to say, they didn't send traders scuttling overseas back in my day though. Financial transactions taxes were the norm in the 50s and 60s (in fact they were doubled after The Great Depression as I remember).

We already have a tax on trading uncertified stock as well (the Stamp Duty Reserve Tax). That's 0.5% (or it was when Thatcher brought it in), and doesn't seem to have driven much abroad either.

 

Few facts on that:

=Market markets including banks are exempt from stamp duty on shares. So its only pension funds that pay on UK stocks and PI's etc. on transfer of the asset.

=CFD's and futures etc. are fully exempt. 

=That was introduced in 1986... before then there were no transactional taxes in the UK.

United states had a transaction tax till the 60s, might be what you were referring to. But as that was.. in the new age of telecommunications driving transactions abroad  it was scrapped.

 

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All they will do is fill warehouses full of more  crap smuggled in containers Under valued and pretend it's a kosher uk business.

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  • 397 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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