Fedex & Import VAT Headache - Am I Stupid? (Very possibly).

[Indietrader]

Hi,
I frequently import goods from Japan and the USA. The deliveries come in via the EU (they are larger value shipments, not below the £135 threshold). I use Fedex Express; it's expensive but fast and I've never had any real problems. I normally receive the goods within a few days of dispatch with Fedex having covered any charges and then a week or so later get an invoice from them detailing fees for VAT, Import Duty and any other incidental charges. I pay Fedex and then can refer to the VAT amounts paid in my normal VAT return calculations.

Since the beginning of the year I have been receiving invoices from Fedex with no VAT showing.
I have spent hours and hours trying to get someone at Fedex to explain to me why this is. I presume it is to do with the new customs regulations. Nobody at Fedex seems able to explain what is happening.
I am worried that Fedex have somehow opted to defer my VAT payments so the parcels just go straight through. If this is the case I have no clue how I am supposed to know how much VAT should have been paid. I am envisioning receiving demands from HMRC for huge amounts of VAT plus penalties somewhere down the line. I have tried to look up on the HMRC website what might be happening and they talk about some kind of option where you pay the VAT through your quarterly VAT return. They also say customs is very complicated you will probably need to employ a broker. I have never needed a broker before. I have a small business; I just don't think employing a broker is going to be financially viable. But it seems the couriers - or Fedex at least - are not supplying the information needed to do as HMRC are requesting.

Is anyone else experiencing this? Have I missed something I am supposed to have done? (I already use an EORI number). I am finding these new regulations mind-boggling. I pay a very high fee for an express courier and normally I haven't had to worry about this. Is it looking as though importing by courier is not going to work any more unless you also use a customs broker?

Maybe I'm just stupid but I've managed to run a successful business for over a decade, do my own tax returns and have had them inspected and passed by HMRC so I'm not totally daft. This new legislation seems to be tying small British businesses in knots. I'm happy to pay the VAT required but why does it have to be so flaming difficult to do it? Is paying at the point of entry still an option? And if so how can I ensure this happens?

 

[japancool]

You're not the only one. I've not had a VAT bill from Dachser (my European road haulier) for months. Occasionally, I get a shipment via UPS and they raise charges that have to be paid before delivery.

However, I use EMS at the moment for Japanese imports, and since that comes in via Parcelforce, I always get a bill before the goods are released.

 

[DefinitelyMaybeUK]

Very odd - we used to use Fedex for Canadian imports, but have been using UPS this year due to pricing - as you say, VAT used to be obvious Have you checked for any postponed VAT statements in your HMRC account? There's a slim chance there's some info shown, see:
https://www.tax.service.gov.uk/customs/payment-records
To paraphrase the HMRC guidance, without a statement you should still account for the VAT due in your returns (box 1 & 4 so it cancels out and box 7 as usual), by reasonably estimating what is due such that it can adjusted in the future should something better come along
https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat

 

[scstock]

From January 2021 HMRC introduced Postponed Import VAT Accounting - PIVA for short :

https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return

This enables importers to account for the Import VAT on your VAT return, rather than paying it on entry, or via a Deferment Account. This potentially increases the time you have to pay the Import VAT from 6 weeks max to 4 months.

Fedex automatically migrated Importers onto PIVA - I think I got an email at some point. You should receive a C88 form from them a week or so after the import detailing how much VAT has been charged. You then need to account for it in your accounts systems as the poster above mentioned.

You also need to download PIVA Statements from HMRC as evidence of Import VAT when you reclaim it - it's not easy to find where they are unfortunately.

 

[Deleted member 335660]

Hi,
I frequently import goods from Japan and the USA. The deliveries come in via the EU (they are larger value shipments, not below the £135 threshold). I use Fedex Express; it's expensive but fast and I've never had any real problems. I normally receive the goods within a few days of dispatch with Fedex having covered any charges and then a week or so later get an invoice from them detailing fees for VAT, Import Duty and any other incidental charges. I pay Fedex and then can refer to the VAT amounts paid in my normal VAT return calculations.

Since the beginning of the year I have been receiving invoices from Fedex with no VAT showing.
I have spent hours and hours trying to get someone at Fedex to explain to me why this is. I presume it is to do with the new customs regulations. Nobody at Fedex seems able to explain what is happening.
I am worried that Fedex have somehow opted to defer my VAT payments so the parcels just go straight through. If this is the case I have no clue how I am supposed to know how much VAT should have been paid. I am envisioning receiving demands from HMRC for huge amounts of VAT plus penalties somewhere down the line. I have tried to look up on the HMRC website what might be happening and they talk about some kind of option where you pay the VAT through your quarterly VAT return. They also say customs is very complicated you will probably need to employ a broker. I have never needed a broker before. I have a small business; I just don't think employing a broker is going to be financially viable. But it seems the couriers - or Fedex at least - are not supplying the information needed to do as HMRC are requesting.

Is anyone else experiencing this? Have I missed something I am supposed to have done? (I already use an EORI number). I am finding these new regulations mind-boggling. I pay a very high fee for an express courier and normally I haven't had to worry about this. Is it looking as though importing by courier is not going to work any more unless you also use a customs broker?

Maybe I'm just stupid but I've managed to run a successful business for over a decade, do my own tax returns and have had them inspected and passed by HMRC so I'm not totally daft. This new legislation seems to be tying small British businesses in knots. I'm happy to pay the VAT required but why does it have to be so flaming difficult to do it? Is paying at the point of entry still an option? And if so how can I ensure this happens?

Surely you appreciated that this is one of the benefits of Brexit.
We enjoyed importing goods from UK for our gift shop in Spain and now we never quite sure what is happening.
Sometimes things sail through with no trouble, other times we have to fill in forms galore.
Sometime we get contacted to pay the Spanish VAT before delivery, other times we pay government direct at the end of the quarter.
Hence we now try and source within the EU.
Good luck.

 

[paulears]

Fedex are so inconsistent. Sometimes you get the request for payment, pre-delivery. I pay it and it arrives but NO VAT invoice available when you pay online as per the request. Sometimes a VAT invoice appears a few days after delivery, but sometimes not. Other times an identical consignment gets delivered with the same customs declarations and values and no matching request for payment. Then you get two requests for different amounts that later you find relate to the same delivery. You raise a query or complaint and nothing happens bar confirmation you complained. UPS are a bit better. TNT often pops up in the paperwork, as despite not really existing, they seem to still generate paperwork with it on.

I can’t keep track. I pay VAT charges immediately and replace the receipt with the VAT receipt if it arrives. As these are from well known companies, I have to accept that a VAT inspection would flag there is no proper VAT receipt, but I have proof I paid it, and hope for the best.

Even worse, the Chinese suppliers for a while charged me VAT on supplies under £135, which was difficult to get proper receipts for but now they’re supplying again without VAT, yet the deliveries are not charging when delivered. I suspect the couriers this end see low value declarations and assume as it’s say, £85, it includes VAT. They just deliver it. I try very hard to do things correctly, but it’s a mess.

 

[Indietrader]

Thanks so much everyone for taking the time to reply. Yes, it seems I must have been migrated by Fedex on to a deferred payment without being informed of this and am not receiving the subsequent paperwork. I'm in pretty much the exact same situation as paulears above. I'm very proactive with my finances as I don't like to accrue debt so I am pushing to get this sorted but this must be happening to thousands of businesses at the moment. Knowing HMRC they will do absolutely nothing and then hit people with massive bills and penalties somewhere down the line.

I am looking to use a different courier and will also look into EMS if I can't get this sorted.

I will also check the links people have kindly provided to see if there is any amount showing as due with HMRC.

Thanks scstock - I think you have the key to it there. This has happened due to the introduction of PIVA.

By emailing the CEO of Fedex I have managed to maker contact with someone higher up in the customer service team. They currently seem as bewildered as I am as to what is going on but I will put some of the points made here to them and hope I make some progress.

All the best everyone with your businesses! If I glean any useful information which might help others I will come back and post it here.

 

[japancool]

Sometime we get contacted to pay the Spanish VAT before delivery, other times we pay government direct at the end of the quarter.

Ah yes, the efficiency of the Spanish postal service is all the fault of Brexit.

 

[scstock]

I'm very proactive with my finances as I don't like to accrue debt so I am pushing to get this sorted but this must be happening to thousands of businesses at the moment. Knowing HMRC they will do absolutely nothing and then hit people with massive bills and penalties somewhere down the line.

The good news is you won't be accruing debt – it just means that rather than paying the VAT and then reclaiming it later you just don't pay it in the first place.

You do need to get the paperwork sorted though – if you already access tax services online with HMRC apply for access to PIVA statements:

https://www.gov.uk/guidance/get-your-postponed-import-vat-statement

 

[Indietrader]

Ah, ok! This is not what I thought! I'm now a bit more confused! So are Fedex correct in what they are doing then? Just sending the parcels through without any VAT listed on the invoices? And I basically just treat them as having no VAT? Don't pay anything, don't claim anything back? So I don't really need to do anything? If this is correct I am relieved; it's gonna be a whole lot easier!

 

[DefinitelyMaybeUK]

And I basically just treat them as having no VAT? Don't pay anything, don't claim anything back?

Not quite - and I could be wrong - but the guidance I've followed (see link in post #3) is that even though you don't pay anyone any VAT money (either upfront before delivery or by subsequent invoice) you still need to account for the VAT on your return (i.e box 1,4 & 7 as stated in #3). It results in a null situation for you, but the reporting is correct (or at least correct until you provide some adjustment figure in the future should a proper statement materialise).

 

[Indietrader]

Ok, thanks so much. So this is where I have the issue then, in that I am not receiving any notification of how much VAT relates to each shipment received so I can't include it it my returns. This is why I was worrying that if I don't record it as being due and then reclaimed (resulting in a null situation), somewhere along the line all of these amounts due could emerge and it would be too late for me to reclaim? I don't know if that could happen but I am always wary of HMRC doing this sort of thing.
So grateful for this forum - this is the help I needed after weeks of getting nowhere. I have explained to the Fedex customer service person what I have found out and am waiting to hear their reply.

 

[DefinitelyMaybeUK]

and it would be too late for me to reclaim

My advice would be to include in your next VAT return any missed imports from the previous period(s) - there may well be limit as to how much you can adjust - best to clarify with your/an accountant/hrmc.

 

[romeo b]

I'm half glad I read this.

We import items (less than $100) about 4 times per year.

Traditionally we'd get an invoice from TNT/Fedex with the VAT due about 3 weeks later.

Since the start of this year, we'd had absolutely no letters or demands for money or anything. Not a word.

We're not VAT reg'd. I am wondering if this is normal, or not, or if I should have been paying anything in the first place given the value. I'm guessing the amounts we previously paid were VAT plus the Fedex handling fee. There's so much documentation and percentages, duty, rates, VAT etc, it's almost impossible to keep up now.

 

[Indietrader]

My advice would be to include in your next VAT return any missed imports from the previous period(s) - there may well be limit as to how much you can adjust - best to clarify with your/an accountant/hrmc.

I will definitely include it if I am ever able to find out how much it is!

 

[scstock]

I will definitely include it if I am ever able to find out how much it is!

Download the PIVA Statements from HMRC - it should be there.

 

[DefinitelyMaybeUK]

Download the PIVA Statements from HMRC - it should be there.

Iirc there was an HMRC page saying they knew there were problems with some Vat not being recorded via some systems and the recommendation was to estimate it - so maybe use the HMRC exchange rate for the import month in question against the actual currency paid (as opposed to the GBP you really paid) for a good baseline figure?

 

[Indietrader]

Download the PIVA Statements from HMRC - it should be there.

Thank you - I've applied to get access to the service which it says will take up to 5 days.

 

[Kalinka]

The good news is you won't be accruing debt – it just means that rather than paying the VAT and then reclaiming it later you just don't pay it in the first place.

You do need to get the paperwork sorted though – if you already access tax services online with HMRC apply for access to PIVA statements:

Hi

I`m experiencing exactly the same problems here but I think that I`m in the worst position because I`m on a Flat Rate Scheme.
How do I sort this out?

Another problem is that some of my suppliers in the EU sometimes send me 2 or 3 invoices regarding different types of goods inside the same parcel and the courier only declares one of the invoices to the customs... leaving the other two without any paperwork (customs declaration) or taxes to pay.

I`ve already contacted HMRC regarding this matter and they simply have no answer... They say it`s the couriers that need to sort it out. The problem is that the couriers also didn't care... They just pretend that they are sorting the problem out!

Anyway I`m thinking about calculating all the import vat due on all those invoices and including in my Box 1 of the next VAT return.
It's not the best way to resolve the problems but at least I can prove that I`ve paid all my tax due.

 

[Indietrader]

Hi

I`m experiencing exactly the same problems here but I think that I`m in the worst position because I`m on a Flat Rate Scheme.
How do I sort this out?

Another problem is that some of my suppliers in the EU sometimes send me 2 or 3 invoices regarding different types of goods inside the same parcel and the courier only declares one of the invoices to the customs... leaving the other two without any paperwork (customs declaration) or taxes to pay.

I`ve already contacted HMRC regarding this matter and they simply have no answer... They say it`s the couriers that need to sort it out. The problem is that the couriers also didn't care... They just pretend that they are sorting the problem out!

Anyway I`m thinking about calculating all the import vat due on all those invoices and including in my Box 1 of the next VAT return.
It's not the best way to resolve the problems but at least I can prove that I`ve paid all my tax due.

Yeah, the whole thing is a complete nightmare for small businesses; we have basically been left to fend for ourselves to sort this out - there is no consistency with the couriers or any real help from HMRC. I have learned a hundred times more from the helpful people on this thread than I have from HMRC.
I thought I had cracked it and had applied to be registered for the Customs Declaration Service where I have been told I can see these PIVA statements which detail the VAT. I had an automated email reply saying wait five days. Then I got another email saying your application has been rejected as some of the details don't match; they suggested there could be a word in the address for example which is not exactly as I have stated it. My premises is in a building where addresses are often written differently i.e. the Concourse or Ground Floor, unit 30 or just 30 and so on so there are numerous possible variations.
I went on to the HMRC webchat yesterday and was told they cannot assist me or give me any details as I have to phone in and get advice. To do that I have to pass security and to do that I - wait for it - have to provide the exact address they have on file! So I'm unable to speak to anyone.
Honestly I have better things to do with my time than to spend day after day trying to resolve this.
I went through the CEO at Fedex and finally have received the VAT figures I needed for my invoices to date but I have parcels coming in every week so that's not the answer. They insist it is nothing to do with them and is between me and HMRC.
So welcome to the club! Wish I could help you but I can't.

 

[Kalinka]

Yeah, the whole thing is a complete nightmare for small businesses; we have basically been left to fend for ourselves to sort this out - there is no consistency with the couriers or any real help from HMRC. I have learned a hundred times more from the helpful people on this thread than I have from HMRC.
I thought I had cracked it and had applied to be registered for the Customs Declaration Service where I have been told I can see these PIVA statements which detail the VAT. I had an automated email reply saying wait five days. Then I got another email saying your application has been rejected as some of the details don't match; they suggested there could be a word in the address for example which is not exactly as I have stated it. My premises is in a building where addresses are often written differently i.e. the Concourse or Ground Floor, unit 30 or just 30 and so on so there are numerous possible variations.
I went on to the HMRC webchat yesterday and was told they cannot assist me or give me any details as I have to phone in and get advice. To do that I have to pass security and to do that I - wait for it - have to provide the exact address they have on file! So I'm unable to speak to anyone.
Honestly I have better things to do with my time than to spend day after day trying to resolv e this.
I went through the CEO at Fedex and finally have received the VAT figures I needed for my invoices to date but I have parcels coming in every week so that's not the answer. They insist it is nothing to do with them and is between me and HMRC.
So welcome to the club! Wish I could help you but I can't.

I`ve also experienced difficulties in registering for the CDS. Like you I`ve received an email saying your application has been rejected as some of the details don't match. I was 100% sure my details were right so I kept trying and after a few weeks and a couple of tries finally I managed to register for the CDS!

After that I went to see my statements to find out there was only one (??) statement available... where the hell are the others??

This is a complete mess...

 

[Kalinka]

I have just received my draft VAT return calculations from my accountant and he is saying that because I`m on a Flat Rate Scheme I don`t have to pay VAT on my EC invoices??

Is this correct?

I just need to apply my rate over my sales and that`s it?

Can someone advice please?

 

[Indietrader]

I`ve also experienced difficulties in registering for the CDS. Like you I`ve received an email saying your application has been rejected as some of the details don't match. I was 100% sure my details were right so I kept trying and after a few weeks and a couple of tries finally I managed to register for the CDS!

After that I went to see my statements to find out there was only one (??) statement available... where the hell are the others??

This is a complete mess...

Looks like there is major chaos (even more than usual) behind the scenes at HMRC at the moment. It's very unfair on business owners simply wanting to file their returns correctly and then be able to get on with running their business.

 

[Scalloway]

because I`m on a Flat Rate Scheme I don`t have to pay VAT on my EC invoices??

Is this correct?

Are you supplying goods or services? As far as I can see goods should be added to turnover but services are not.

 

[Kalinka]

Are you supplying goods or services? As far as I can see goods should be added to turnover but services are not.

Hi, thanks for your reply.

It`s goods, I buy goods from the EU and the accountant is saying that on a FRS you don`t pay for the import VAt..

"Others" say that I need to add the total amount of EU purchases to the total of sales and then apply the flat rate wich in my case is 7.5%

But how can this be right if some parcels are charged at 20%VAT before delivery and others are going to my PVA at 20% as well???

 

[japancool]

"Others" say that I need to add the total amount of EU purchases to the total of sales and then apply the flat rate wich in my case is 7.5%

I don't understand. Why would you pay flat rate VAT on something you *buy*? The whole point of FRS is that it takes into account the VAT you would have paid on purchases in the rate. If you add your EU purchases, then you are effectively paying VAT twice.

 

[Kalinka]

I don't understand. Why would you pay flat rate VAT on something you *buy*? The whole point of FRS is that it takes into account the VAT you would have paid on purchases in the rate. If you add your EU purchases, then you are effectively paying VAT twice.

But when you buy from EU you don`t pay VAt to the supplier. The invoices are VAT exempt.

I have also fund this example on the net:

Is the import VAT claimable on flat rate scheme

"I have a client who is planning to import leather goods and sell in the UK market. He registered for VAT by himself and choose flat rate scheme. We know that input VAT cannot be reclaimed on flat rate scheme except capital items over £2,000. In this case if postponed VAT accounting is used, how can we account for it in the VAT return. HMRC is very unhelpful with this. Although according to their guidance, businesses under flat rate scheme are allowed to use PVA. I have a feeling import VAT does not need to be accounted for anywhere in the VAT return for FRS if PVA is used. But do not want to submit anything based on assumption. Any advice would be greatly appreciated."

Answers:

HMRC wrote:
Flat Rate Scheme for small businesses
If you are using the flat rate scheme for small businesses and are accounting for import VAT on your VAT Return you must add the value of the imported goods to the total of all your supplies, before you do the scheme calculation.

Someone wrote this:

I'd not really thought about this until seeing your post.

You are correct that if using flat rate scheme you add the value of the imported goods to your total supplies made and then you declare output tax as per whatever flat rate percentage. In effect, you treat it as a self-supply, hence treating purchase as a sale then declaring flat rate on that value.

The flat rate rules haven't changed so there is no corresponding input tax recovery in Box 4 unless it's a capital item costing £2k or more.

But, the HMRC guidance states you add the value of the import to your turnover and declare your percentage in Box 1, so this suggests you can actually reduce your import VAT liability under flat rate if you postpone VAT.

Example. I import some goods for my flat rate business. £1,000, import VAT is £200 and freight agent pays this/recharges me, so I end up paying £200 VAT and not able to reclaim it under FRS.

lets say I'm using "retail not listed elsewhere" at 7.5%.... HMRC are suggesting I declare 7.5% on the value of the import in Box 1, which is £75 and I can't reclaim that in Box 4 but I've saved £25 by postponing the VAT at my flat rate percentage rather than at 20%.

Interesting, but limited opportunity? I'll need to read the legislation and guidance in more detail but in theory, sounds do-able.

 

[Indietrader]

I have finally managed to get access to the CDS after phoning them to help to get my address exactly the same as they have it. I just eagerly logged in a minute ago. There's nothing there..... Everything says zero.....

 

[Indietrader]

Found further guidance which appears to equate to, "We've completely messed up; can you just guesstimate it. Thanks. P.S. Then please come back and correct it all when we do manage to provide the statements."

I'm not allowed to post the link as I'm a new member of the forum but it's at gov uk guidance complete your vat return to account for import vat hashtag access