TAX HACKS

The trade deal ended uncertainty but has caused headaches for those buying foreign goods, says Mike Warburton

Whether you voted to leave or remain, you will surely have been relieved when the Prime Minister announced a Brexit trade deal had been agreed, if only to end the uncertainty.

You may even have thought that life could then proceed as normal. However, Covid-19 aside, it has not turned out that way,

At the beginning of January, we left the EU customs union, single market and common VAT area. This has imposed major changes in the way importers account for goods arriving from the EU. This has been a major headache, both for business and for individuals. Now, for online purchases, when goods are imported, VAT will be charged, and not by the overseas supplier, but by the importer.

The same applies for online purchases, but these have to be dealt with by the courier. On Jan 1 2021, the UK’s low-value consignments exemption, for goods not exceeding £15 in value, was withdrawn. This makes all imports subject to VAT and potentially customs duties. Online marketplaces must now account for VAT on behalf of suppliers. An exemption applies where the value does not exceed £ 135, excluding shipping costs and duty. The new rules also apply to anyone in the UK who receives a gift from the EU worth more than £39.

The extra charges will usually be collected by the courier, with customers asked to pay before they pick up their package.

Whether your deliveries come through DHL, Royal Mail or any other carrier, if the supplier is in the EU, there will likely be a delay while the documentation is processed. It is also likely they will need to charge you VAT and possibly duty, together with a charge for the extra administration involved. This cannot be paid in advance and has to be charged when the goods arrive in this country.

Please do not blame the courier. The deal was made by the Government. Suppliers are trying to catch up on the rules and details are still being negotiated.

WHAT ABOUT PURCHASES AND SALES ON EBAY? If additional tax is applicable on your eBay purchase, you will see this indicated on the listing page and the tax amount will be shown clearly before you pay. The same £135 limit applies. You can download the invoice from the order details. Again, there could be delays as the goods are cleared through customs and the VAT is collected.

Selling on eBay to someone in the EU is essentially the same process in reverse. The normal threshold value for VAT is € 22 (£ 19.50) but this varies between countries.

The next question is what you can do about it if, having ordered an item, you decide the extra costs do not make it worthwhile. Unfortunately, consumer rights have become more complicated for online purchases and gifts. The Consumer Rights Act still applies, but you must return the goods within 14 days and there will be costs involved in returning.

I expect there will be many disputes over this, but unfortunately any legal issues have to be settled through the courts in the country supplying the item, which makes it very unlikely to be worthwhile.

There is another solution to all this. How about buying what you need from British producers? Our manufacturers and retailers here need all the help they can get. I am trying to buy British and also support local suppliers whenever I can.

I have discovered just how many varieties of great British cheese are available online, such as Baron Bigod. With regular veg box and meat deliveries and the milkman supplying local eggs, organic milk and butter, I have not needed to visit the supermarket in months.

Mike Warburton was previously a tax director with accountants Grant Thornton

Buying British cheeses is one tasty way to avoid additional import duties