US company shipping to UK and insisting sale is VAT exempt

[LukeGSP]

Hi all

I recently purchased a piece of equipment from:

DeerRun® UK | Empowering Women Through Fitness | Based in Birmingham

Discover premium home gym equipment with Free UK Delivery. Shop the range of treadmills, bikes & rowers online now. Multiple payment methods & 24/7 support.

uk.deerruntreadmill.com

for our staff workplace gym.

We are VAT registered so it is my understaning I can claim back the input VAT.

Their website shows a UK contact address and I made the assumption the retail price would include VAT, as not mentioned otherwise.

After requesting a VAT invoice, their customer service is insising it's a VAT exempt sale, as they are US based.

I'm not sure this is correct, aren't they obliged to charge UK VAT? Therefore the retail price listed should include VAT?

Please correct me if I'm wrong!

Thanks
Luke

 

[Paul Kelly ICHYB]

We are VAT registered so it is my understaning I can claim back the input VAT.

If they have not charged VAT, how can you record it?

aren't they obliged to charge UK VAT?

Not if they are not registered.

Therefore the retail price listed should include VAT?

What does it say on the website and your invoice?

 

[Customs Geek]

It’s complicated, but the fact a company is based overseas doesn’t necessarily exempt them from VAT registration in the UK .
If they are making supplies of goods subject to VAT in the UK then they must register irrespective of the values of sales. There is no VAT registration threshold for overseas businesses.
www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat.

If they have a UK registered entity ( and premises) then the normal VAT registration threshold applies.

If the goods are imported and over £135 then they would be subject to import VAT.

As Paul Kelly says - check their website to see what information they provide on their company . Unless you know what their status is and where the goods are when they are sold to you it’s difficult to say whether they should be VAT registered and charge VAT.

Not sure what you can do other than report them to HMRC if you think there is something untoward .

 

[LukeGSP]

Thanks both.

The invoice address is:
From
DeerRun - UK
JOYFIT INC.
10611 Harwin Dr. ste 406
Houston TX 77036
United States
8885890777

And the Tax total on the invoice is 0.

But based on:

https://www.gov.uk/guidance/vat-and...goods-that-are-in-the-uk-at-the-point-of-sale

Goods that are in the UK at the point of sale​

If you are an overseas seller who owns goods of any value that are located in the UK at the point of sale you must register and account for VAT on any sales you make directly to customers in Great Britain or Northern Ireland.
I feel like this applies to them!

If they were shipping from overseas then I would have had an invoice from the couriers for duty and VAT, assuming it was a Duty Unpaid service. But I haven't, and they have advised that it is shipped from a UK address anyway.

So I think they should be applying VAT, and as @Customs Geek said there is no threshold.

If they have not charged VAT, how can you record it?

I know, I can't! But my argument is that they should have charged VAT, and the items are being missold on their website.

Actually I've just loaded up their website again and added something to my basket, and it says:

VAT tax included. Free shipping on all orders.

I'm happy to report to HMRC but just want to be sure I've not made an error.

 

[Paul Kelly ICHYB]

What have you lost?

Is it really worth any effort?

 

[LukeGSP]

What have you lost?

Is it really worth any effort?

I think it's more the principle if they are tax dodging! But you may be right.

Thank you for your help.

 

[MikeJ]

Have you actually received the goods? I wonder if this is just a scam website

 

[Scalloway]

I wonder if this is just a scam website

My anti-virus blocked it.

 

[LukeGSP]

Have you actually received the goods? I wonder if this is just a scam website

Yep received. I'd seen them recommended in forums too. The product is good and the customer service too, just not sure about the VAT issue!

 

[jimbof]

Well, it sounds like you've not been charged VAT, nor have they claimed the price was specifically 20% VAT inclusive, so there is nothing for you to reclaim.

If you think their business practice is breaking regs, suggest you report them to HMRC.

If you thought you were going to get it cheaper than advertised (because you were going to reclaim 20% VAT) I'd suggest you need to sharpen your observation. There are lots of times this proves to not be the case. Amazon used to catch people out all the time but is better now since their change of regs; but loads of places look to be selling things in pounds but aren't including VAT / charging VAT with a questionable story as to the location of the goods.

Aliexpress is another good one, as they are now adding a 20% charge for the UK, yet don't provide any kind of UK VAT number on their invoices.

 

[LukeGSP]

Well it did say VAT included, and it looked like a UK website with a UK contact address.

But yeah, lesson learned. I will check before ordering if it's not a company I'm sure about.

Thank you for the reply

 

[jimbof]

Well it did say VAT included, and it looked like a UK website with a UK contact address.

But yeah, lesson learned. I will check before ordering if it's not a company I'm sure about.

Thank you for the reply

There is nowhere I could find on their site, terms or checkout system that mentions VAT specifically, if you have such a screenshot would be useful, not least because claiming to be collecting VAT on something and not actually doing so is something I'm sure HMRC would be interested in. All I saw was a note that the price includes "taxes and fees". These firms are usually pretty careful about exactly what they say, and it's usually the hallmark for steering clear if you either care about their stance on taxes and duties, or are reliant on the VAT reclaim aspect to make the transaction viable.

I always check the T&Cs for the jurisdiction they are operating out of. There are , for example, some British-sounding Camera companies online (often including UK place names in their name) that are operating in a similar way (also with Hong Kong based companies like this one you list). There it's even more insidious, given the purchaser is often unwittingly purchasing goods that are being parallel imported without local Manufacturer representative warranty support.

I still use the likes of Aliexpress for some business items as they are often still the most economic / fastest option, even when the lack of ability to reclaim the VAT is considered.

 

[LukeGSP]

There is nowhere I could find on their site, terms or checkout system that mentions VAT specifically, if you have such a screenshot would be useful, not least because claiming to be collecting VAT on something and not actually doing so is something I'm sure HMRC would be interested in. All I saw was a note that the price includes "taxes and fees". These firms are usually pretty careful about exactly what they say, and it's usually the hallmark for steering clear if you either care about their stance on taxes and duties, or are reliant on the VAT reclaim aspect to make the transaction viable.

I always check the T&Cs for the jurisdiction they are operating out of. There are , for example, some British-sounding Camera companies online (often including UK place names in their name) that are operating in a similar way (also with Hong Kong based companies like this one you list). There it's even more insidious, given the purchaser is often unwittingly purchasing goods that are being parallel imported without local Manufacturer representative warranty support.

I still use the likes of Aliexpress for some business items as they are often still the most economic / fastest option, even when the lack of ability to reclaim the VAT is considered.

I have a screenshot that shows 'VAT Tax included' but I'm not sure how to add an image here. If you add something to your cart on their website and then go to cart, not checkout, you should be able to spot it.

With a UK contact address and UK shipping dispatch address, I still feel like they should be showing prices including UK VAT. They are a massive company so they could potentially be avoiding paying a lot of UK tax and unfairly competing against local businesses.

Or I could be completely wrong, which is fine. I'm not an expert! Just confused about it.

Thanks again for your help

 

[DontAsk]

Are they VAT registered https://www.gov.uk/check-uk-vat-number

 

[LukeGSP]

Are they VAT registered https://www.gov.uk/check-uk-vat-number

I'm not sure, that tool only checks a VAT number if given, but I can't find evidence of one.

 

[jimbof]

I have a screenshot that shows 'VAT Tax included' but I'm not sure how to add an image here. If you add something to your cart on their website and then go to cart, not checkout, you should be able to spot it.

With a UK contact address and UK shipping dispatch address, I still feel like they should be showing prices including UK VAT. They are a massive company so they could potentially be avoiding paying a lot of UK tax and unfairly competing against local businesses.

Or I could be completely wrong, which is fine. I'm not an expert! Just confused about it.

Thanks again for your help

OK, I see it now, that does appear to be the only place there is a trace of it, it doesn't appear anywhere actually itemised. I note also they say "VAT tax", which is a bit nonsensical. If you push it enough with them you might find an invoice "appears", but if not then really the only thing you can do is report it and move on.

 

[LukeGSP]

OK, I see it now, that does appear to be the only place there is a trace of it, it doesn't appear anywhere actually itemised. I note also they say "VAT tax", which is a bit nonsensical. If you push it enough with them you might find an invoice "appears", but if not then really the only thing you can do is report it and move on.

Yeah I think I will just leave it for now! Thanks for the help.

 

[paulears]

I am just migrating from freeagent to xero - and watching many of the videos on youtube, I found one on reporting VAT with xero - but it was an american video and they were talking about their VAT not ours, so they would indeed rate the export at 0, but we would probably get our 20% UK VAT added on import. Two different systems with the same name

 

[Customs Geek]

I am just migrating from freeagent to xero - and watching many of the videos on youtube, I found one on reporting VAT with xero - but it was an american video and they were talking about their VAT not ours, so they would indeed rate the export at 0, but we would probably get our 20% UK VAT added on import. Two different systems with the same name

The USA doesn’t have VAT so it can’t have been referring to USA VAT. Some states have local sales tax but they wouldn’t call it VAT as far as I am aware.
Yes import UK VAT would be added at import but that is charged directly by HMRC if the consignment is above £135 in value or an import by a VAT registered business.

In OPs case the goods were said to be shipped from the UK so should already have been imported wholesale and import VAT paid by the importer .

There’s nothing on the above posts that suggest that the goods have been imported directly following order by the OP.

 

[LukeGSP]

The USA doesn’t have VAT so it can’t have been referring to USA VAT. Some states have local sales tax but they wouldn’t call it VAT as far as I am aware.
Yes import UK VAT would be added at import but that is charged directly by HMRC if the consignment is above £135 in value or an import by a VAT registered business.

In OPs case the goods were said to be shipped from the UK so should already have been imported wholesale and import VAT paid by the importer .

There’s nothing on the above posts that suggest that the goods have been imported directly following order by the OP.

Yeah if they hadn't said clearly that it was shipped from the UK, I might have thought it was a DDP import where they had covered the import duty and VAT.

It's specifically the use of a UK shipping address, which is the only address I could see on their website, combined with their use of the phrase 'VAT Tax Included' which caught me out. I purchased an item for the price of £150 believing it was costing me £125 (ex VAT), but in actualy fact I've paid £150 with no VAT. It's false advertising and I may have oherwise ordered from a competitor, and from what I can see it's against HMRC rules!

Thanks again for the replies.

 

[paulears]

The American voice on the xero training videos talks about there being different VAT in different states - you'd think they'd know VAT doesn't exist in the US

 

[jimbof]

Aliexpress is another good one, as they are now adding a 20% charge for the UK, yet don't provide any kind of UK VAT number on their invoices.

I realised when doing my most recent VAT return that I may have maligned Aliexpress - they are now including a clearly stated (and valid) UK VAT number on their invoices, and so I'm now claiming the VAT back on their purchases. The actual digits only were actually previously being put on the invoices, but with no indication it was a GB VAT number (or VAT number of any other kind...). I must have missed out on at least £50 here... lol.

GB372233611

VAT registration details​

Registered business name​

ALIBABACOM SINGAPORE E-COMMERCE PRIVATE LIMITED

Registered business address​

HM REVENUE AND CUSTOMS
RUBY HOUSE
8 RUBY PLACE
ABERDEEN
AB10 1ZP
GB

 

[paulears]

I have looked back through a years worth of my aliexpress purchases. They have my VAT and EORI numbers and none have VAT shown anywhere. If I look at prices I see everything with no VAT added at all. If I log out, and look at the same item, the price shows with 20% VAT added. My aliexpress items arrive at the the lower price. I don't reclaim any VAT as I was not charged any. If you don't have your VAT status in the system, then having that UK number should bring about the same end product, price wise. I'm actually doing it wrong, of course as I should voluntarily pay the VAT, then reclaim in the next return. I simply include it with no VAT content and forget it.

 

[jimbof]

I have looked back through a years worth of my aliexpress purchases. They have my VAT and EORI numbers and none have VAT shown anywhere. If I look at prices I see everything with no VAT added at all. If I log out, and look at the same item, the price shows with 20% VAT added. My aliexpress items arrive at the the lower price. I don't reclaim any VAT as I was not charged any. If you don't have your VAT status in the system, then having that UK number should bring about the same end product, price wise. I'm actually doing it wrong, of course as I should voluntarily pay the VAT, then reclaim in the next return. I simply include it with no VAT content and forget it.

I was paranoid about providing the EORI and creating a trail of unpaid at the border (though technically net-no effect); and that without doing the "correct" filings for the sake of the few quid I might end up with a VAT inspection. I figured buying on a claimed "DDP" status from Aliexpress was simpler (also how I buy from Mouser / Digikey), and just eating the few quid as I wasn't comfortable submitting the invoices they provided for reclaim. Now I can see their invoices are updated with a confirmed valid GB VAT number, it seems quite reasonable to just treat as any other supplier with a GB VAT invoice.

Not sure if you're in a similar position to me; but I use "Freeagent" for the accounts in conjunction with an online accountancy firm for my simple Ltd company affairs, and it's not clear that it actually supports doing "proper" company things like the VAT payment and reclaim that you suggest - I'd also ascertained that was what I was supposed to do - and couldn't work out how to. As the scope of what I'm doing expands and I have more substantial import/export I'm going to have to work it out, and probably move away from this off-the-shelf contractor accounting package to something a bit better. Joy!

 

[paulears]

I was paranoid about providing the EORI and creating a trail of unpaid at the border (though technically net-no effect); and that without doing the "correct" filings for the sake of the few quid I might end up with a VAT inspection. I figured buying on a claimed "DDP" status from Aliexpress was simpler (also how I buy from Mouser / Digikey), and just eating the few quid as I wasn't comfortable submitting the invoices they provided for reclaim. Now I can see their invoices are updated with a confirmed valid GB VAT number, it seems quite reasonable to just treat as any other supplier with a GB VAT invoice.

Not sure if you're in a similar position to me; but I use "Freeagent" for the accounts in conjunction with an online accountancy firm for my simple Ltd company affairs, and it's not clear that it actually supports doing "proper" company things like the VAT payment and reclaim that you suggest - I'd also ascertained that was what I was supposed to do - and couldn't work out how to. As the scope of what I'm doing expands and I have more substantial import/export I'm going to have to work it out, and probably move away from this off-the-shelf contractor accounting package to something a bit better. Joy!

I do indeed use freeagent, but I'm shifting to xero shortly. So at the moment, no idea how the next chapter will work. With alibaba - depending on which agent they use to ship, I usually get no VAT, unless UPS decide to charge it and then I have their VAT number to use against that one.

 

[Customs Geek]

I realised when doing my most recent VAT return that I may have maligned Aliexpress - they are now including a clearly stated (and valid) UK VAT number on their invoices, and so I'm now claiming the VAT back on their purchases. The actual digits only were actually previously being put on the invoices, but with no indication it was a GB VAT number (or VAT number of any other kind...). I must have missed out on at least £50 here... lol.

GB372233611

VAT registration details​

Registered business name​

ALIBABACOM SINGAPORE E-COMMERCE PRIVATE LIMITED

Registered business address​

HM REVENUE AND CUSTOMS
RUBY HOUSE
8 RUBY PLACE
ABERDEEN
AB10 1ZP
GB

This is the address that HMRC use for overseas businesses required to register for VAT in the UK . These are known as NETPs - non established taxable persons.

If the goods are sent direct to UK consumers and the consignment is valued below £135 then the overseas seller must register for VAT in the UK and charge UK supply VAT. As these transactions are treated as direct to consumers there isn’t likely to be to be a standard VAT invoice as consumers don’t need VAT invoices.
If the goods are being sold to UK VAT registered businesses and the customer provides their VAT no to the overseas seller then no UK VAT is charged , instead the UK business is expected to account for for the VAT by reverse charge.
Any goods over £135 are subject to normal customs procedures with VAT being charged at import or if requested by a VAT registered business postponed VAT accounting can be used. The overseas seller won’t therefore charge UK VAT or provide a VAT invoice.
www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces

 

[Customs Geek]

I do indeed use freeagent, but I'm shifting to xero shortly. So at the moment, no idea how the next chapter will work. With alibaba - depending on which agent they use to ship, I usually get no VAT, unless UPS decide to charge it and then I have their VAT number to use against that one.

UPS don’t charge the VAT at import they will however recharge what they have paid to HMRC ( that HMRC calculate) on your behalf. If no import VAT looks like it has been charged then it’s likely postponed VAT procures have been used.
In both cases the proof HMRC need for input VAT purposes is either a C79( when VAT has been paid) or postponed VAT statement. Both these documents must be downloaded by the importer .
www.gov.uk/guidance/get-your-postponed-import-vat-statement
www.gov.uk/guidance/get-your-import-vat-certificates

You may also find this useful.
www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad