DHL Payment Deferment Risk

[jimfoxy]

Small China import. We don't have a DHL account and supplier used DHL. VAT and handling fees charged to us by DHL upon landing (handling has been renamed 'PaymentDefermentRisk'). We are VAT registered.

Does the PaymentDefermentRisk (listed as category VAT on the DHL paperwork, which it is clearly not) include a VAT charge itself or is it zero rate VAT?

Can we demand a VAT invoice from DHL for this PaymentDefermentRisk charge?

 

[paulears]

You don't have to demand anything - email them with the consignment number and they will happily send you a VAT invoice. The format looks like this.

 

[jimfoxy]

Thank you, Paul. Do you know what EU/UK VAT classification is the 'Advance Payment' service that they charge for? Do you know why this is zero VAT when it is a service charge from DHL UK?

Also, which email address to request the receipt/invoice? All emails they send are noreply@. In your experience, is the receipt/invoice automatically sent after a while? Thanks for your help.

 

[paulears]

Short answer = no, but ALL the people who deliver from China, which for me means DHL, TNT, UPS, parcel force and Fedex operate the same system. Clearly HMRC have a system with these people to handle the stream of parcels, and they are a collecting agency for the VAT and the Duty if levied. My guess is that as they handle the VAT generation, based on the declared values and other details, and also the line that gets crossed to generate duty, HMRC do not consider this a 'service' in the usual way and the charge is essentially compensation for settling what you owe, before delivery. I assumed that this facility and the zero rating was just an agreement with HMRC available to freight forwarders, bonded warehousing and other similar activities. For my importing, £12-16 is typical. It doesn't seem to change as invoice prices go up. Other than that, I can't help. I claim the VAT back in the usual way - which needs manual assistance in my software to show the VAT as a proportionally too large amount on the courier firms advance charge - but it works OK.

 

[jimfoxy]

I claim the VAT back in the usual way - which needs manual assistance in my software to show the VAT as a proportionally too large amount on the courier firms advance charge - but it works OK.

This is very interesting. You claim the 'advance payment' service charge back as VAT (with DHL it becomes a % when total customs value >£400 from what I have read)? This is really the crux of my enquiry; how this service charge is classified and whether it can be claimed back or not. I had assumed not. I believe there is an administratively burdensome option to apply for deferred charges with HMRC which, I assume, will put your company on a database that gives the desired result with a courier like DHL somehow:
https://www.gov.uk/guidance/setting-up-an-account-to-defer-duty-payments-when-you-import-goods

Do you always automatically receive a monthly C79, too? What concerns me here (see below) is that the 'import declaration' will have been completed by DHL and I don't think they have asked for our EORI (I could be wrong but it is not on any paperwork I have seen from them), nor is the average Chinese company going to care.
https://www.gov.uk/guidance/imports-and-vat-notice-702#section8

From HMRC:
You need to hold official evidence of VAT paid on imported goods before you can recover the VAT as input tax. The normal evidence is the monthly certificate, known as form C79. It does not in itself allow you to claim back the VAT you have paid which must, in all cases, be deductible under the normal input tax rules.

We send the certificates (form C79) to the VAT, EORI-registered person whose VAT registration number is shown in box 8 of the import declaration. You must take great care to use the correct EORI number. If not, the VAT you have paid may not appear on your certificate and may even end up on another person’s certificate. Similarly, you may find someone else’s import VAT on your certificate.

We will take action against agents, importers who persistently quote incorrect EORI numbers. This may include prosecution.

 

[paulears]

I've never been able to make the VAT charged match the value declared - looking at the various VAT invoices they all seem to include a little extra VAT? I can't double check Fedex - their invoices which feature a £12 advancement fee simply detail the VAT (labelled as Import Tax, and also as Original VAT) but their invoices do not indicate the goods declared value, so I can't check that simply to check the maths.

Royal Mail - Parcelforce is a bit cheaper and again, simply details the VAT amount.

From my perspective, all I do is take the amount of VAT in the transaction and use that, and treat the advancement charge as the cost - ignoring the VAT calculation.

UPS call their charge a disbursement Fee, but the system is exactly the same - declared value, VAT and the fee.

 

[jimfoxy]

Thanks for the clarification, Paul. All the best.

 

[Chris Ashdown]

Never realised we were so close Paul, just outside Gt Yarmouth

 

[paulears]

Small world isn't it!