EBay charging 20% VAT up front

[jelida]

I have bought a couple of coins from overseas (Holland, Canada) since January 1st and on both occasions EBay have added import VAT at 20% and this cannot be avoided if you go through their system. Luckily the vendors thus far have been amenable to direct payment. However this has driven me to check whether the 5% VAT on numismatic items still applies. It seems that it does, looking at HM Government’s Trade Tariff website. However as usual, there is some bureaucracy; if you follow the channel for section XXI, Works of Art, Collectors Pieces and Antiques https://www.trade-tariff.service.gov.uk/headings/9706   you will see that the import VAT is indeed 5% , or 20% without clarification as to when the latter might apply. This further breaks down into commodity code 9705000000 which includes collections or collectors pieces of numismatic interest,  and further to commodity code 9705000020 for collectors pieces of silver or gold.

Has any-one found a way to get around this apparently incorrect demand for 20% import VAT in the EBay system?  I know it is now up to overseas sellers to charge the VAT up front, but surely at the correct level? Perhaps the seller should be putting the correct level of VAT into the system when he compiles his ad? Anybody here have a perspective or experience regarding this matter, which could affect all of us buying coins from overseas in that we may end up having to make frequent refund claims from the revenue.

Jerry

[Rob]

I suspect it operates under the same system as for shipping to certain states in the US whereby sales tax is payable by the purchaser and is automatically added to their invoice, though as a seller, the money doesn't actually land in the vendor's account. As a seller, they won't charge the VAT personally, and let's face it, most sellers of coins are private individuals, many of whom don't believe VAT is due on any transaction, nor that HMRC should be in any way involved. Ebay are therefore acting as a tax collector at the point of import to get around this issue.

What's happened here is likely to be a half baked operating method, whereby ebay only apply 20% VAT and call it quits because the number of 5% items is minimal in the context of imports. I suspect the only way around it is to get payments out of ebay's control working again in whatever way is possible. You will lose buyer's protection (if it means anything), but given most people on both sides are honest, it should work for much of the time if the will is there. Making a separate Paypal payment outside eBay and ensuring the seller puts the right description on the customs label will work, but for low cost things, say up to about 75 quid, a 20% payment to ebay will be cheaper than the Royal Mail or courier admin fee plus the import vat which will become due if not already paid. Alternative is to veto it, because they are unlikely to listen to reasoned argument having already agreed terms with HM Gov. Ebay applying the right tax would be the cleanest and most equitable way forward, but don't hold your breath.

I'm also wondering how the Royal Mail will know that import tax has been paid? Their default position has to be charging tax unless there is proof of prior payment.

I don't know if the code that seems to be included in the address of every purchase is connected to this? Anybody?

Edit to add that if you are going to get 5% VAT applied on coins, then the vendor will somehow have to communicate the eligibility of the item for treatment to ebay. As we know, not all coins are equal, so differing rates apply and this will almost certainly be beyond the ken of a foreign vendor who is likely to be as au fait with tax codes and the finer points of the VAT regime as the man on the street is here. There is also another potential issue in that people may start describing items as those in lower tax bands and claim ignorance, which I'm sure HMRC have considered. Taxing at the top rate for imports and the buyer reclaiming excess tax is therefore likely to be the best option, as you will have both parties with the required knowledge and it protects all interests.

Edited January 16, 2021 by Rob

[1949threepence]

Is this a recent change? I've bought a number of coins from abroad, and VAT has never yet been applied by e bay - only by Royal Mail or Parcel force if they happen to intercept it on it's way from arrival in the UK, to my letter box.

I know that USPS & Canada Post don't apply it either. Although Fed Ex apparently do and it's an administrative nightmare to get the refund of 15%. What we seriously want to avoid is a situation where 20% VAT is applied twice, once by e bay and then by the courier.       

[1949threepence]

6 minutes ago, 1949threepence said:

Is this a recent change? I've bought a number of coins from abroad, and VAT has never yet been applied by e bay - only by Royal Mail or Parcel force if they happen to intercept it on it's way from arrival in the UK, to my letter box.

I know that USPS & Canada Post don't apply it either. Although Fed Ex apparently do and it's an administrative nightmare to get the refund of 15%. What we seriously want to avoid is a situation where 20% VAT is applied twice, once by e bay and then by the courier.       

Answering my own question, yes it is. Applicable from 1.1.21 - explanatory link

Quote

We strongly urge sellers listing on eBay.co.uk or other European eBay sites to specify the applicable VAT rates on existing listings as soon as possible. All new listings should include a VAT rate. You will find the field for the VAT rate beside the price when you create or edit listings.

So hopefully for coins they will just insert 5%, as specified in law. 

Quote

 

The changes at a glance:

From 1 January 2021, eBay will start to collect and remit VAT for UK imports on all consignments with a value of up to £135. There will no longer be a VAT exemption for small consignments up to £15.

 

Presumably then, interpreting in a strictly logical sense, they don't apply it if the consignment has a value of over £135, based on purchase price.  

[Rob]

All this specifying the VAT rate by sellers is irrelevant for exports, as the only VAT applied is on importation. i.e. the vendor would be required to know and upload the rates for each item in each country they sell to. Items listed on ebay by business sellers are required to be VAT inclusive as far as I know, because it is deemed to be similar to a shop, the reason being the public see the full price inclusive of all taxes as they are unable to reclaim any of it. Businesses have to ask for a VAT receipt and claim it back if registered. The rate of VAT in the country where the item is listed is not important because ebay doesn't collect 20% on internal sales. Nor should it.

[Mr T]

As Rob says, I assume ebay just makes it 20% because that's the easy thing to do.

Here in Australia ebay adds 10% GST to all international purchases - I don't know the ins and outs of the GST but I know it doesn't apply to everything.

[1949threepence]

I think there's very obvious gaps in knowledge and mechanics, which need fully explaining before we get a complete handle on how this new system works. 

 

[ozjohn]

EBay charges 10% GST on goods going to Australia and should not be charging VAT on exports from the UK.My advice for buying overseas coins from Australia is to buy from the seller’s site not EBAY if possible . You may be charged the UK VAT, which should not be levied but you will  most probably avoid the Australian GST.