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Tax on Imported Goods

Hi Guys,

I have a client who is VAT registered and has found a new supplier based in China. Not sure if it matters but he imports furniture. My understanding is that he will have to pay duty and VAT when the goods arive in the UK.

Is any of this reclaimable?



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The Vat element of the charge by HMRC will be recoverable as Input tax subject to receiving a C79. The Customs Duty is not recoverable if the goods are subject to Duty in the first instance. Your clearing agent will be able to tell you if the goods are subject to Duty and the rate applicable.

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Ok thanks. What would be the "usual" charge by HMRC? Is this something I need to make the client aware of? Should he recieve anything specific?

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Customs Duty is based on the Cost including Freight generally and this will be a cost to the client. VAt is then calculated on the Cost plus Duty and will be recoverable.

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So just to fully understand.... Duty is added to the costs already paid including the cost of goods, and then VAT is charged on this? So basically you pay VAT on Duty?

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Shaun is pretty clear - unless

Unless the delivery terms are DDP in which case the duty is paid by the supplier. Unlikely though, but worth checking the delivery terms.

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Have a look at this,

knowledge of which is essential if your cli ent is dabbling in international trade. 

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caution guys

Please be careful in areas such as import and export. The comments have been helpful but all are incomplete and none emphasise that this is a specialist area which is easy to get very wrong.

VAT and duty are calculated on a basis laid down by HMRC or Customs & Excise as we used to know them. Many elements of costs are brought in to the calculation including for example insurance premiums paid on goods in transit cover. The recovery of VAT will follow normal recovery rules and as previously indicated a C79 is essential.

Duty CAN BE recovered in some circumstances and this is where appropriate professional advice is needed. Freight companies are often a useful starting point but care should be taken as they are not always expert. HMRC has a useful website. The amount of duty involved will obviously indicate if it is worth the effort of trying to mitigate the charge i.e. is it economic to challenge it. Also some items are levied at zero duty rate.

Finally the various data elements recorded in the HMRC system are often entered by an agent (usually a freight company or import agent) but as far as HMRC is concerned the business purchasing the item is RESPONSIBLE for the accuracy of the data and HMRC does levy penalties for incorrect data. As purchaser/importer you must ALWAYS check the full data entered and the best way is to insist on a copy of the import entry document from your agent, this is a C88. And finally finally there is no duty on movement of goods between any two EU countries.

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Sorry I agree a specialist area and I am a specialist but you can only ever give answers based on the information provided and we could write a book on valuation and relief's from Duty etc but there is no indication that the goods are going into anything but free circulation

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as i said caution is needed

I'm not an expert but have a reasonable amount of practical experience and the biggest problem is people not understanding the complexities. For example terms such as "free circulation" have specific meanings and in many instances are not understood nor comprehended and effectively pass overhead unoticed. I wouldn't be surprised if the OP or his client haven't understood such technical terms. Goods are frequently entered to free circulation or Home Use because no other regime has been selected.

This is not meant to be criticism. I'm trying to make the point that it isn't an easy subject and if the amounts of money involved (VAT & Duty) are significant then proper professional advice is essential and this forum is not that. The values involved haven't been indicated, so if they are small then this may just be a useful exchange of views, but as always we should all be aware that HMRC takes these matters seriously.

Best wishes to all those grappling with the complexities of import/export.

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I was back in 'Lost in Space' there for a moment!  (If you don't know what I am talking about you are probably <50!)

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