Importing to the UK from China - DDP

[amdai]

Does anyone know how exactly DDP import from China works? I have tried this with a small shipment worth a couple of hundred quid and successfully received this. However, it just didn't feel correct. Here's why:
I didn't receive any paperwork for the entry in to the UK, nothing to show any VAT/Import duty was paid (like an invoice from the shipping company or other paperwork), and the whole shipping cost was pretty cheap overall. The parcels were delivered by DPD at my end. I got the shipment delivered to my door approximately 32 days after shipping from China.

How does DDP from China work? is it all above board? What should I be expecting? Is it even legal?

My usual method involves sea freight using one of two well known UK based freight companies. They pick up the goods from the factories, load them into their consol boxes, bring them over to the UK, do all the import entries, send me the paperwork, ask me to pay the duties and VAT, and then load them onto pallets and deliver them to me. That can take anything from 45-55 days door to door from China.

Does anyone here use DDP shipping from China?

 

[apricot]

It depends on your deal with them. I’ve had several imports where, a couple of times, the delivery fee included customs charges—which was expensive—and they also paid the VAT (I reimbursed them but was able to claim the VAT back).

On another occasion, I paid all the costs myself at the time of goods arrived to customs. Make sure to check who they’re using as a carrier and clarify who is responsible for paying what. These details often change depending on the carrier they use to send the products.

 

[Customs Geek]

Does anyone know how exactly DDP import from China works? I have tried this with a small shipment worth a couple of hundred quid and successfully received this. However, it just didn't feel correct. Here's why:
I didn't receive any paperwork for the entry in to the UK, nothing to show any VAT/Import duty was paid (like an invoice from the shipping company or other paperwork), and the whole shipping cost was pretty cheap overall. The parcels were delivered by DPD at my end. I got the shipment delivered to my door approximately 32 days after shipping from China.

It’s unlikely that you would receive any paperwork if this came via courier as they don’t routinely send out customs docs.
If the sender was picking up all the charges then the courier has no reason to contact you.

How does DDP from China work? is it all above board? What should I be expecting? Is it even legal?

It’s not illegal but comes with risks.
It depends on what the seller regards as DDP. The couriers just offer it as a service meaning the seller picks up the import charges.The couriers have simplified customs clearance process.With a courier they will make the delivery to you so less risk of non delivery.
In most cases it will be the recipient who is declared as the importer and therefore the person HMRC could come after if the declaration is wrong.
A non uk person can’t be the importer in their own right so less likely, but possible , is that the overseas party has a uk affiliate who can act as the Uk importer.
With traditional freight the import process is a bit more involved meaning proper customs clearance procedures. Often the uk buyer find they have extra charges or no one has made any provision for onward transport from the border.

 

[Customs Geek]

It depends on your deal with them. I’ve had several imports where, a couple of times, the delivery fee included customs charges—which was expensive—and they also paid the VAT (I reimbursed them but was able to claim the VAT back).

Usually you can only claim back the VAT paid if

• you were the importer and owner of the goods and have an official C79 document proving entitlement. Or
• The supplier has issued you with the VAT invoice showing a UK VAT number.

You do need to download the C79 yourself.
www.gov.uk/guidance/manage-your-import-duties-and-vat-accounts

 

[MOIC]

Does anyone here use DDP shipping from China?

We do many transactions using DDP to customers in Europe, including the UK.

It's legal, but don't expect the same amount of paperwork as you'd receive if you were importing under your own steam.

 

[AmazonGeek]

Nothing fishy about DDP and I woudln't worry about the paperwork provided you have done your due dilligence on whoever you are buying from, which you should do anyway, or duty will be the least of your worries.

Just make sure you agree on the definitions. DDP only includes the VAT if that is agreed up front with the supplier. They pay all the other stuff but make sure you don't get hit with a VAT bill when it lands. You will have to pay VAT to the courier before they release the goods otherwise.

 

[Pāndéyáo]

As a freight forwarder in China, our company specializes in providing DDP/DDU services from China to the UK. For DDP (Delivered Duty Paid) service, our partner customs broker in the UK handles the customs clearance, with the tax and duty fees included in the freight charge. If you prefer to pay the taxes yourself and obtain tax payment proof, you can opt for DDU (Delivered Duty Unpaid) service, where our customs broker will use your VAT number to clear the goods and provide you with valid tax payment invoices and Customs C88 documents.

 

[simonliu]

if you look at the incoterm,
you will find DDP in the last column, which the seller responsible for the whole way from seller to the buyer, including import duty, Tax and clearance.

of course, those cost will be included in the product quotation for sure, meaning at buyer's account. but this help you to regardless those complicated documents and logistic expertise.

if the importing destination (buyer) can claim importing duty and tax, I will suggest the buyer to pay for this, therefore you can get it exempted. otherwise, the exporter may not entitled to exemption, it depends on the importing countries custom policy.

hope it helps.

 

[comundo]

How does DDP from China work? is it all above board? What should I be expecting? Is it even legal?

Did you manage to get the answers? Please let us know what it ended up with. I have placed my first several orders and DDP was agreed on. However it will be couple of months before they arrive. Is it really my problem to track and chase up if the VAT has been paid? Incoterms is the set of rules and regulations our country agreed with, now it is being used buy exporters and importers, DDP for instance is not stating how and if any paperwork should be provided to the buyer and they are not according to what people are saying. I am LTD but not VAT registered. What can I do? I have put all my further orders on hold before I get it all cleared up. Can someone please shed some more light on it.

 

[Customs Geek]

Is it really my problem to track and chase up if the VAT has been paid?

In the UK and EU customs duties and import VAT must be paid or secured prior to release from customs.

Incoterms is the set of rules and regulations our country agreed with, now it is being used buy exporters and importers,

Incoterms have been used in international shipping since the 1930’s so it’s nothing new.
They are actually written by the international chamber of commerce ICC.


DDP for instance is not stating how and if any paperwork should be provided to the buyer and they are not according to what people are saying.

The Incoterms rules only set out the responsibilities, risks and costs to the buyer and seller. They do not say anything about paperwork , ownership, payment etc nor do they take into account local customs regulations . Most people using Incoterms don’t fully understand them and haven’t read the rules in full. There’s a book with all the rules not just a chart.

Many people saying DDP are not actually referring to the official Incoterms at all. All they mean is that they will pay for shipping and the customs . Sometimes they may include VAT but often they don’t.

Incoterms are not a shortcut to having a clear contractual understanding between the buyer and seller. You need to make sure you fully understand understand what you are agreeing to.

Whether you are entitled to any customs ‘paperwork’ will depend on who is being named as the importer. If you are not the customer of the broker performing the customs clearance it’s unlikely they will give you anything.

I am LTD but not VAT registered. What can I do?

there is no requirement to be VAT registered or a Ltd company to import. Import duties and import VAT need to be paid by anyone importing.
Only a VAT registered person who is named as the importer and owner of the imported goods is entitled to reclaim import VAT.

 

[comundo]

'The Incoterms rules only set out the responsibilities, risks and costs to the buyer and seller. They do not say anything about paperwork , ownership, payment etc nor do they take into account local customs regulations . Most people using Incoterms don’t fully understand them and haven’t read the rules in full. There’s a book with all the rules not just a chart.'

Thank you very much for all that information.
Sellers I dealt with assure me that all the import taxes incl. VAT will be paid under our DDP agreement, also state no paperwork will be provided with the shipment. So all I have got is the Alibaba receipts for goods purchase. Is it enough from my point of view for accounting purpose and can I proceed with my future orders or perhaps I should do in any different way then?

 

[comundo]

Does anyone know how exactly DDP import from China works? I have tried this with a small shipment worth a couple of hundred quid and successfully received this. However, it just didn't feel correct. Here's why:
I didn't receive any paperwork for the entry in to the UK, nothing to show any VAT/Import duty was paid (like an invoice from the shipping company or other paperwork), and the whole shipping cost was pretty cheap overall. The parcels were delivered by DPD at my end. I got the shipment delivered to my door approximately 32 days after shipping from China.

How does DDP from China work? is it all above board? What should I be expecting? Is it even legal?

My usual method involves sea freight using one of two well known UK based freight companies. They pick up the goods from the factories, load them into their consol boxes, bring them over to the UK, do all the import entries, send me the paperwork, ask me to pay the duties and VAT, and then load them onto pallets and deliver them to me. That can take anything from 45-55 days door to door from China.

Does anyone here use DDP shipping from China?

What are the UK based freight companies that you recommend?

 

[Customs Geek]

Thank you very much for all that information.
Sellers I dealt with assure me that all the import taxes incl. VAT will be paid under our DDP agreement, also state no paperwork will be provided with the shipment. So all I have got is the Alibaba receipts for goods purchase. Is it enough from my point of view for accounting purpose and can I proceed with my future orders or perhaps I should do in any different way then?

If you are not the importer then you shouldn’t expect any import paperwork.
I would expect that the invoices from the supplier will be all you need for accounting purposes.
If you are VAT registered then the invoices won’t suffice as proof of VAT payment unless it is an invoice issued by a uK VAT registered businesses and the invoice mentions their VAT number.
If you are VAT registered then DDP where you are not the importer named on the import entry and the the VAT is paid as part of the DDP may not be the best choice.

 

[Customs Geek]

What are the UK based freight companies that you recommend?

if you are buying DDP you shouldn’t need to engage a freight company.
Do you want freight companies who transport goods if so what means of transportation do you need? or do you mean customs clearance agents?
There is a list of customs agents some who also do transport listed here.
www.gov.uk/guidance/list-of-customs-agents-and-fast-parcel-operators

 

[s1mple]

DDP is almost smuggling. Most likely, it is being declared at customs with undervalued amounts, labeled as something else. From an accounting perspective, it shouldn’t be possible to record it unless you personally go to customs and declare that you’ve received a shipment, which could also lead to fines. Your accountant should be the best person to advise you on whether they can record a Chinese invoice if you haven’t made an official import and haven’t paid customs duties and VAT.

 

[MOIC]

DDP is almost smuggling. Most likely, it is being declared at customs with undervalued amounts, labeled as something else. From an accounting perspective, it shouldn’t be possible to record it unless you personally go to customs and declare that you’ve received a shipment, which could also lead to fines. Your accountant should be the best person to advise you on whether they can record a Chinese invoice if you haven’t made an official import and haven’t paid customs duties and VAT.

Don't let a China supplier arrange the shipping, unless they are aware of their responsibilities and who will be paying the Import Duty. In most cases they are not.

However, if done correctly, it is perfectly legal.

How to be fully compliant when importing goods from China with DDP terms? - Community Forum - GOV.UK

 

[Customs Geek]

DDP is almost smuggling.

No genuine DDP shipments don’t bypass customs clearance requirements.

Most likely, it is being declared at customs with undervalued amounts, labeled as something else.

Yes this definitely happens in some cases . It’s the responsibility of the declared importer to ensure the value and nature of goods is accurately declared . If the buyer isn’t the importer then they are not legally responsible. If a customs broker is declaring themselves as the importer that is high risk to them. Most simply won’t do that.
Where the problem arises is when the buyer is unknowingly declared as the importer as is often the case. This is why I said earlier that it’s high risk to the buyer if they don’t fully understand what’s been agreed.

From an accounting perspective, it shouldn’t be possible to record it unless you personally go to customs and declare that you’ve received a shipment, which could also lead to fines.

It’s not possible for a buyer to rock up to customs in the UK and make a declaration personally. UK customs declarations are mainly made by a customs agent using specialist software on behalf of the importer. It doesn’t make the customs agent the importer only the representative of the importer.

Your accountant should be the best person to advise you on whether they can record a Chinese invoice if you haven’t made an official import and haven’t paid customs duties and VAT.

Not all accountants are necessarily experts in customs . If the buyer has an invoice for the purchase what reason would there be for not including in the purchase figures for the business? The invoice will unlikely to be an invoice for VAT purposes so cannot be used to reclaim any VAT .

 

[MOIC]

Not all accountants are necessarily experts in customs

Agree, most are not.

 

[s1mple]

No genuine DDP shipments don’t bypass customs clearance requirements.

Yes this definitely happens in some cases . It’s the responsibility of the declared importer to ensure the value and nature of goods is accurately declared . If the buyer isn’t the importer then they are not legally responsible. If a customs broker is declaring themselves as the importer that is high risk to them. Most simply won’t do that.
Where the problem arises is when the buyer is unknowingly declared as the importer as is often the case. This is why I said earlier that it’s high risk to the buyer if they don’t fully understand what’s been agreed.

It’s not possible for a buyer to rock up to customs in the UK and make a declaration personally. UK customs declarations are mainly made by a customs agent using specialist software on behalf of the importer. It doesn’t make the customs agent the importer only the representative of the importer.

Not all accountants are necessarily experts in customs . If the buyer has an invoice for the purchase what reason would there be for not including in the purchase figures for the business? The invoice will unlikely to be an invoice for VAT purposes so cannot be used to reclaim any VAT .

The reason for not including it is the import duty fee. This is what customs look for, and if you receive your package without proper documents, it means you haven't paid it. If your accountant doesn't know about this and this is something you plan to do often, then you need to consider changing your accountant. The same applies to the buyer. Lack of knowledge is not an excuse with these institutions, and there is a high likelihood of a fine being imposed.

 

[Customs Geek]

The reason for not including it is the import duty fee.

Not including what? Undervaluing goods happens through ignorance or purposely whatever Incoterms are used.

This is what customs look for, and if you receive your package without proper documents, it means you haven't paid it.

No it doesn’t mean someone hasn’t paid the duties. Anyone can pay the taxes . HMRC don’t care so long as it’s paid. Goods cannot physically be released from customs until taxes are secured. There is no legal requirement for the importer to physically pay themselves. For low volume importers it mostly it’s paid on their behalf by the customs agent. The agent will have a credit account with customs. The agent / broker then recharges this to the seller under DDP.
Under DDP the seller includes an amount to cover the duty
Because of this It might look like goods arrive with the buyer without duty being paid but that isn’t the case.

If your accountant doesn't know about this and this is something you plan to do often, then you need to consider changing your accountant.

It’s not an accountants job to understand customs. It’s not necessarily their field of expertise. I think you would be lucky to find an accountant with a deep understanding of of customs legislation and procedures.

The same applies to the buyer.

Yes exactly what I have been saying. Buyer embark on importing without understanding what is involved. Further they take the sellers word on how customs operate in the buyers country. DDP is dangerous but done properly certainly not illegal or smuggling.

Lack of knowledge is not an excuse with these institutions, and there is a high likelihood of a fine being imposed.

Yes I know I deal with customs every day on behalf of my clients.

 

[MOIC]

The reason for not including it is the import duty fee. This is what customs look for, and if you receive your package without proper documents, it means you haven't paid it. If your accountant doesn't know about this and this is something you plan to do often, then you need to consider changing your accountant. The same applies to the buyer. Lack of knowledge is not an excuse with these institutions, and there is a high likelihood of a fine being imposed.

@s1mple are you speaking from your own (perhaps bitter) experience, or are you an import expert?

It would be good for the forum to understand your personal experience in these issues, otherwise you may be misleading readers.

The vast majority of accountants couldn't name you more than 2 incoterms.

 

[s1mple]

I have been importing goods for 8 years, and I recently had a long period customs inspection that ended without any fines. So, I roughly know what I'm talking about.

 

[Customs Geek]

In another post you mention you are not in the UK. Have you imported into the UK?
As this is a UK business forum I am only talking about how customs works here in the UK.
Each customs authority operates in a different way even throughout the EU.
My experience is from 4 decades of working directly with and for many importers of all sizes .
What is common with the EU and UK is that only the importer who is legally declared on the declaration can be held liable for any customs debt.
Certainly here in the UK customs do not rely on paperwork they have all the data electronically so know exactly who has been declared as importer and what taxes have been paid.

 

[MOIC]

I have been importing goods for 8 years, and I recently had a long period customs inspection that ended without any fines. So, I roughly know what I'm talking about.

'Roughly' being the optimum word?

I've been shipping from China to UK for over 40 years, so I definitely know what I'm talking about.

 

[comundo]

if you are buying DDP you shouldn’t need to engage a freight company.
Do you want freight companies who transport goods if so what means of transportation do you need? or do you mean customs clearance agents?

Thank you for above response! I would probably eventually want to use my own forwarder in China so I can get all my goods from several suppliers collected and shipped at once. I would like to find a UK based freight company that would have their own forwarders or forwarders they work with in China and import agent in UK to deal on my behalf with all the import paperwork so I can receive the VAT invoices and when the time come I can use these to claim VAT on the goods I sale when I need to become VAT registered in the future. So if you can recommend any such companies that do the complex services please let me know. I rather ask for recommendation that google and pick one I know nothing about.

If my understanding is correct, instead of DDP I would want to use DAP for further imports to the UK. But would it be DAP if I use a company to deal with everything on my behalf of other called method I am still not 100% sure. DDP is simple but I am missing the VAT invoices and it is VAT I will never be able to claim back if I become vat registered. I am only starting the adventure with trading so please do not be harsh on me. My actual suppliers are assuring me there is no goods hiding value on importing to UK taking place and that the correct import duty and VAT is being paid to UK customs on DDP incoterms.

 

[Customs Geek]

If my understanding is correct, instead of DDP I would want to use DAP for further imports to the UK. But would it be DAP if I use a company to deal with everything on my behalf of other called method I am still not 100% sure.

There are 10 incoterms other than DDP so it’s up to you and the seller to choose one that suits your business transaction. Depending on what term you choose, where it’s your responsibility you can choose to use third parties. It doesn’t impact on the Incoterms choice.

DDP is simple but I am missing the VAT invoices and it is VAT I will never be able to claim back if I become vat registered.

it’s important to understand that import VAT chargeable at the port of entry doesn’t work in the same way as it would if you purchased goods from a VAT registered supplier in the UK.
The correct proof of import VAT payment and basic entitlement to import VAT recovery is a C79 document generated by HMRC based on the declaration made. It is only issued to the person named as importer and whose EORI number is declared. It doesn’t take into account who physically paid the VAT. You have to download these yourself.
www.gov.uk/guidance/manage-your-import-duties-and-vat-accounts.
The other advantage with this is you can see which imports your EORI/ VAT number has been used on.

You cannot use the invoice from the customs agent as it’s not an official VAT invoice . This is because they are not charging VAT on goods or a transaction but asking for repayment of VAT they have paid on your behalf.
Nor can the seller issue you an invoice for UK VAT as they are not making a supply in the UK .
If you do use the wrong docs to claim import VAT you risk it being disallowed if you get your VAT return audited by HMRC.

I am only starting the adventure with trading so please do not be harsh on me.

Sorry if my responses seem harsh they are not intended to, however I do try to stop urban myths about importing and new importers misunderstanding what actually happens at the border in the UK.

My actual suppliers are assuring me there is no goods hiding value on importing to UK taking place and that the correct import duty and VAT is being paid to UK customs on DDP incoterms.

Again if you are not being named on the import declaration it’s not your responsibility nor do you need to prove that tax was paid.
If you are the importer then it is your responsibility , even if you are not aware you are . This is common with DDP if the seller isn’t honest about it which many are not. You have to remember when you source through the likes of Alibaba you don’t always know who exactly you are dealing with and how reputable they are.
Reputable customs agents should provide an importer with a copy of the declaration on request but to do that you do need to know who made the declaration in the first place.
It’s widely known that there is massive undervaluation of imports particularly from China and customs authorities globally are looking to close loopholes.

If you want to get to grips with requirements and take your imports seriously you can start here.
www.gov.uk/import-goods-into-uk
Local chambers of commerce are also good sources of help

 

[DontAsk]

Probably a different situation, but what happens when someone like FedEx is involved, who pay the VAT on your behalf and then raise an invoice after delivery?

I have always included this VAT on my return.

I do not have any C79 certificates.

 

[Customs Geek]

---

Probably a different situation, but what happens when someone like FedEx is involved, who pay the VAT on your behalf and then raise an invoice after delivery?

I have always included this VAT on my return.

I do not have any C79 certificates.

Yes it’s exactly the situation when someone pays the import VAT on your behalf.

As I said you have to download the certificates yourself they don’t get sent to you.

The monthly C79 is the official evidence that import VAT has been paid on a consignment . It is the only evidence HMRC usually accept as the primary evidence to support the input ( import) VAT deduction. You also need to meet the requirements to make that deduction.
So you must be:

• the declared importer,
• the owner or purser of the goods
• Using the goods for your business.

www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad

Specifically the section titled

Imported goods — accounting for import VAT​

You can only use an official VAT invoice for VAT deduction purposes . The invoices from the courier don’t meet that criteria so are not acceptable to HMRC.
What constitutes a VAT invoice is in section 16 here:
www.gov.uk/guidance/vat-guide-notice-700

You should consider using postponed VAT accounting instead as this means you don’t pay and reclaim but account for the import VAT on your VAT return instead.
Again you must download the monthly statement.