FedEx VAT REBILL

[N-UPS]

We've been getting some VAT rebill invoices from our courier FedEx

We ship DAP/DDU - so the VAT should be charged by FedEX to the customer before parcel delivery.

FedEx have been sending us VAT rebill invoices months after the original delivery date.
We have been disputing them, but not gaining traction.
The account manager seems unable or unwilling to grasp it.

I've asked to be shown the T&C section which covers this policy, no reply.
Asked for Credits - not issued.

Their CS responses are simlar to
"The shipments was originally billed under recipient account number and then processed rebill to shipper account due to we didn't received the payment of the recipient as per expected payment terms, so shipper is ultimate responsible for the shipment charges.
Now the revised invoice is billed to shipper so we are unable to process rebill to recipient or third party.

FedEx pays the fee upfront to have the shipment released from Customs so that it can be delivered. Once the shipment has been delivered FedEx will issue the invoice to retrieve the funds that were paid upfront. "

Anyone else seeing this, either with FedEx or another courier?

 

[DontAsk]

Sounds like your customer didn't pay up.

 

[LPB 123]

We ship DAP/DDU - so the VAT should be charged by FedEX to the customer before parcel delivery.

Generally Fedex deliver first and bill afterwards. That is the case whenever we receive shipments from them anyway.

I am sure they have probably covered themselves in their T&C's that the shipper will pay in the event the customer doesn't.

Could you ship DDP instead?

 

[N-UPS]

Hi
DDP is tricky as we don't know what we get charged for the clearance, so we normally charge 5% on top of the buyer country VAT rate.

Secondly, and this is worth getting input on, I read that we should bill it as import taxes and not VAT on the customer invoice, so they struggle to reclaim the VAT on their returns, rather than just the simple VAT line of an import/clearance invoice from a courier. For people, this is of no bother, but for a company the inability to reclaim VAT makes things dearer. This sounds wrong so I'm going to double check now.

https://www.accountingweb.co.uk/any-answers/can-a-ddp-customer-reclaim-vat-if-we-recharge-them

"Short answer, no, customer cannot reclaim recharged import VAT.

DDP (Delivered Duty Paid) means that you, as the seller, is responsible for the import VAT at EU destination, so lets say customer is in Italy, the freight agent will pay the Italian VAT and recharge this back to you, you cannot reclaim this VAT unless you have an Italian VAT number. So you end up on the hook for VAT.

You can zero rate the export to your Italian customer and factor in the Italian VAT and shipping costs in your pricing, but would mean putting up your price by Italian VAT and the customer cannot reclaim that as you can't show the Italian VAT as a separate line on your invoice as you are not Italian VAT registered so the customer would be paying Italian VAT hidden within your pricing and unable to reclaim it."

 

[LPB 123]

Your admin fee for clearance should be the same every time I would have thought. It is for most couriers but I have never used Fedex for DDP.

If you ship B2B then DDP doesn't work well for the reasons you've said.

But you could ship DDP for your B2C customers and DDU for B2B. If they input a valid VAT reg number on your site, you can remove the import taxes from the price and then ship DDU and they can reclaim the import VAT.

Are your VAT rebills coming from your B2C or B2B sales?

 

[DontAsk]

DDP (Delivered Duty Paid) means that you, as the seller, is responsible for the import VAT at EU destination, so lets say customer is in Italy, the freight agent will pay the Italian VAT and recharge this back to you, you cannot reclaim this VAT unless you have an Italian VAT number. So you end up on the hook for VAT.

You can zero rate the export to your Italian customer and factor in the Italian VAT and shipping costs in your pricing, but would mean putting up your price by Italian VAT and the customer cannot reclaim that as you can't show the Italian VAT as a separate line on your invoice as you are not Italian VAT registered so the customer would be paying Italian VAT hidden within your pricing and unable to reclaim it."

If it's not DDP the Italian customer will also be charged Italian VAT on import so they would pay more than double since the VAT will be calculated on the higher (supposedly VAT included but 0 rated, which is a nonsense) amount.

 

[N-UPS]

I have one of each (B2C + B2B) on my desk right now.

One is quite bad.
The total paid after ebay Fees was something like £193
FedEx charged 95 shipping
then the rebill vat £96

Left us with about £2 net positive

cost of goods, time etc probably around £110

I've got to laugh

 

[N-UPS]

If it's not DDP the Italian customer will also be charged Italian VAT on import so they would pay more than double since the VAT will be calculated on the higher (supposedly VAT included but 0 rated, which is a nonsense) amount.

For clarity the text you are responding to is from accounts web. I think their advices is to either
1/ Ship DDU/DAP and let the couriers sort it
2/ Ship DAP, and incorporate VAT into your core price

Neither of these would be double Vatting. That would only happen if you incorporated VAT in your price, and then shipped DDU/DAP.

 

[scstock]

I had this a few times at the start of the year with some big (for us) orders, so being re-billed thousands of pounds of Import VAT.

Thankfully, this was B2B to a customer in Germany who I have a good ongoing relationship with.

We did eventually get to deal with someone intelligent in FedEx- I think I had to wait for one of their regular "two minutes for your views on FedEx" email surveys and then somebody did come back to me.

I think the demands for payment from the customer were getting marked as spam, but once they then paid them, I was able to get the invoices credited back.

It does make me wonder how hard they actually tried to get payment before re-billing. They could have asked me for contact details but did not. Whereas I cannotreceive any shipments from overseas without either paying the import charges upfront or having some kind of deferment or PIVA in Place.

Just dealing right now with a case where UPS have charged import duty on goods of European origin in a clear breach of the UK/EU post Brexit trade agreement and again I think that UPS, FedEx and all carriers need a heavy dose of regulation applied. This stuff is too important to allow them to outsource it to overseas call centres who don't give a damn.

 

[N-UPS]

I've wondered if they are clearing most things or not?
If they dont bill the customer for import VAT/Duty, who is going to complain or know about it?

 

[N-UPS]

Thank you for your reply. At least I know it is not just me.

Our customers are often one off purchases. There will be no appetite to settle the bill.
The clearance process is handled by FedEx. If they deliver the goods before they take payment for the import taxes, that is their policy and should be their risk.

We wont accept the risk that this policy induces.

 

[Paul Kelly ICHYB]

There will be no appetite to settle the bill.

Do you tell them of the potential liability?

 

[N-UPS]

Do you tell them of the potential liability?

I am embarrassed to do so. It is 4 months since the order was delivered.
Furthermore, this is / should be in the couriers remit as they have charged us for the service of clearing customs. I do not wish to be charged to do their work for them.

 

[Newchodge]

I am embarrassed to do so. It is 4 months since the order was delivered.
Furthermore, this is / should be in the couriers remit as they have charged us for the service of clearing customs. I do not wish to be charged to do their work for them.

Perhaps not for this item, but I think you need to advise all customers of their potential liability before they check out.

 

[N-UPS]

We do give information to that effect both in general T&C and specifics regarding international trade, and it is clear that shipping is DAP/DDU.

 

[Newchodge]

We do give information to that effect both in general T&C and specifics regarding international trade, and it is clear that shipping is DAP/DDU.

I think you need to give he information specifically, prior to checkout.

 

[N-UPS]

I think you need to give he information specifically, prior to checkout.

Agreed
Considering we have never had a complaint, or even an email of suprise from a customer who was not expecting to pay import duties, I think the case rests that we have this covered.

The precis of this issue is that we are being billed the customers VAT obligations due to our courier (FedEx) lack of performance in handling DDU/DAP consignments, and I would like to focus on that.

 

[scstock]

Do you tell them of the potential liability?

I stopped B2C sales soon after Brexit because of these issues.

One time I relented after a customer in Spain was begging us to supply an obscure spare part that we had in stock, and despite him agreeing on the phone that he understood there would be Import Charges for him to pay he still refused delivery when he got the bill and the item was returned at our expense.

 

[DontAsk]

For clarity the text you are responding to is from accounts web. I think their advices is to either
1/ Ship DDU/DAP and let the couriers sort it
2/ Ship DAP, and incorporate VAT into your core price

Neither of these would be double Vatting. That would only happen if you incorporated VAT in your price, and then shipped DDU/DAP.

What I said “if it’s not ddp”.