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Understanding customs duty and VAT

HM Revenue and Customs (HMRC) and The British Chanmbers Of Commerce joined forces in a new six-month campaign raising awareness of the VAT simplification schemes for small businesses. According to research, many small firms are unaware of the schemes available to make paying VAT more simple.

Online shopping sites like eBay are used more than ever by sellers and to source stock and equipment cheaply. This can mean using international sellers.

HMRC (formerly Inland Revenue) recently took an interest in this fast growth international trade, concerned it may be missing out on import duty or VAT. So, to keep straight with the taxman when importing small amounts of goods, here are a few pointers to remember.

For starters, when importing from inside the European Union (EU) there is no requirement to pay duty or VAT on most goods. Notable exceptions are tobacco and alcohol. Other import regulations, duties and restrictions may apply also with things like meats, cars, and plants.

However, if importing from outside the EU, in a lot of cases customs duties and VAT must be taken into account.

Packages worth up to £18 (22) are exempt from VAT and customs duties. Senders need to show the value of the goods on a form on the outside of the package. This form is provided by the post office or courier service.
  • Gifts worth up to £36 are exempt. They must also be declared on the outside form.
  • Damaged goods or goods needing to be returned for any other reason also escape duty.
Import duty and VAT is payable on everything else over the value thresholds. This cost can at times be prohibitively expensive. (variations occur considering country of origin and goods supplied). Taxes are payable to whoever delivers the goods. The mail or courier service for example.

When planning to import on a larger scale get in touch with HMRC for help with more details.
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