Getting a bloody business account open for a company that imports from China?

Discussion in 'Accounts & Finance' started by Simple Smartphone Shop, Jul 13, 2018.

  1. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    I am having a massive headache trying to simply get a business account open, banks promise quick decisions on applications but have been leaving me waiting weeks and weeks before they get back to me asking for more documents and info, rinse and repeat.

    My business is simple. I only want to import phones from China to sell in the UK. Unfortunately it seems banks flag this up as high risk because it involves trade with China, and they have to go through a billion checks before accounts can be opened.

    I do want a proper account not one of those emoney ones because I must have an IBAN to receive payments and I want proper protection for my funds.

    What is the best bank for setting up an account serving this type of business, does anyone have any insight? This has been stretching out for over a month now, still no account opened for my company which is just sitting dormant even though I have everything in place because without an account I cannot trade and it's driving me mad.

    Thank you to anyone who can give me some suggestions.
     
    Posted: Jul 13, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  2. NickGrogan

    NickGrogan UKBF Ace Free Member

    1,393 284
    Its the phones that are the issue, not importing from China.
     
    Posted: Jul 13, 2018 By: NickGrogan Member since: Nov 15, 2012
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  3. Mister B

    Mister B UKBF Ace Free Member

    2,337 529
    We import directly from Asia, and had no problem at all in opening an account with NatWest. That maybe though that I've been a personal customer with good rating for over 30 years.

    So, try your existing bank, otherwise I've heard good reports about HSBC who claim to be the world's truly global brand.

    Mister B
     
    Posted: Jul 13, 2018 By: Mister B Member since: Aug 31, 2007
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  4. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    The banks tell me it is both, it seems the reason I'm having trouble is because both phones and Chinese trade are flagged up. Any idea why they dislike phones so much? I see a million companies selling phones, do they have this much trouble simply opening an account?

    I was originally going to try HSBC but I have heard such nightmares about their "safeguarding" and accounts getting closed over it, even though the paperwork was filled correctly, because of errors made on their end. There's articles about this affecting many SMEs.

    NatWest was one of the next on my list, might as well try them.
     
    Posted: Jul 13, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  5. Glenn Martin

    Glenn Martin UKBF Regular Free Member

    145 40
    Phone traders were often involved in what was called Vat carousel fraud and most banks just closed all accounts as a precaution.

    I think you will struggle to get an account opened with a high street bank

    Have you tried the likes of Cash Plus as they open accounts instantly and if its all electronic payments that should work for you
     
    Posted: Jul 13, 2018 By: Glenn Martin Member since: Oct 1, 2015
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  6. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    Honestly find it pretty barmy that banks will close all accounts for a certain type of business just because some were involved in fraud.

    My problem with those emoney banks like Cash Plus or Tide is that they don't give you an IBAN or the same protections as a "real" bank.

    I am wondering how all these many many companies selling phones on eBay and Amazon are managing their money if truly none of them can get a business account.

    If this really is the case I might just give up on this idea and try something else, or else continue as a sole trader.

    My company is registered with Companies House and HMRC but due to all this banking mess has never traded, so it should be pretty straightforward to just get it struck off right? I assume I need to inform HMRC before doing so as my accountant registered the company for CT?
     
    Posted: Jul 13, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  7. Glenn Martin

    Glenn Martin UKBF Regular Free Member

    145 40
    At the time the scale of the fraud was huge and legit traders were the minority.

    Can you not tell the bank you are an ebay trader, sell the stuff via paypal etc I cannot see why there would be an issue by the stock from China on a credit card.

    Buying cheap stuff from China and selling it via ebay/paypal should be fairly standard as that's probably half of ebay do.
     
    Posted: Jul 13, 2018 By: Glenn Martin Member since: Oct 1, 2015
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  8. Mr D

    Mr D UKBF Legend Free Member

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    Why tell the bank you are importing phones?

    Last few times I opened a business account I told them we were an ecommerce seller with a variety of items.
     
    Posted: Jul 13, 2018 By: Mr D Member since: Feb 12, 2017
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  9. mattk

    mattk UKBF Newcomer Free Member

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    Have you seen some of the fines issued to banks recently? The downside of more stringent regulations is that banks are incredibly risk averse and would rather close a legitimate account than risk a fine for it's misuse.
     
    Posted: Jul 13, 2018 By: mattk Member since: Dec 5, 2005
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  10. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    How long ago was this? Doesn't sound like it was in the too recent past at any rate.

    That is pretty much my business except I'm doing it off my own site because I figure building a brand is better than being just another search result buried in eBay. But that is not good enough for the banks they want invoices, contracts, the blood my first born... I explained I am not a huge operation with bulk supply contracts and the bloke seemed understanding but it's head office so there's no getting around this.

    What I really want to know is this... how do all these high risk businesses get bank accounts? Not just phone shops I mean the industries you'd traditionally consider high risk like gambling. You see those online casinos advertised on telly every night, surely someone is providing them with a bank account. Is there a bank or two in the UK that doesn't mind the risk? Are they going to foreign banks?

    They want a business plan and all sorts.

    Besides if I lied about what my company does and they do a review of my account and find this out they'd just close it anyway.

    Also my company literally has the word "smartphone" in it.

    Cryptocurrency cannot become mainstream soon enough.
     
    Posted: Jul 13, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  11. Mr D

    Mr D UKBF Legend Free Member

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    A business plan? Invoices? Contracts? To open a bank account?
    Is that simply because of the phones?

    Or are you wanting large credit facility at the same time?

    Try a different bank.

    Or try a different business. How are you at self employed?
     
    Posted: Jul 14, 2018 By: Mr D Member since: Feb 12, 2017
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  12. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    Yes, multiple banks are asking me for all this info before they can even open an account. It must be because it's phones I guess. Not asking for any credit facility at all.

    I might have to just scale it back to self-employed, looking into it folding my ltd company when it's never traded isn't difficult, but I'd hate to give up before I've even started. And as a self-trader I'm back to square one pretty much just selling on eBay with PayPal which is likely to remain a side job not a real business. If I want to take in serious money I need a business account even as a sole trader.

    So this is pretty ridiculous. My business is being held back by red tape when literally all I want to do is sell mobile phones. Something everyone carries in their pockets daily. The way these banks were acting you'd think I was trying to open a cocaine shop.

    Again I have to wonder who is providing bank accounts for all the online phone retailers and physical independent phone shops as well as the businesses that are actually high risk like online casinos? Do they just use foreign banks? If so, which ones? Seems like my last resort would be finding a bank that doesn't mind extra risk or I've hit a stone wall.
     
    Posted: Jul 14, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  13. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    Posted: Jul 14, 2018 By: Chris Ashdown Member since: Dec 7, 2003
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  14. Scalloway

    Scalloway UKBF Legend Free Member

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    Posted: Jul 14, 2018 By: Scalloway Member since: Jun 6, 2010
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  15. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    Five cases in 2012 = I can't open a bank account for a simple little ecommerce company in 2018. I guess I am a victim of this "de-risking" business I keep hearing about.

    @Chris Ashdown the IBAN requirement is nothing to do with China, I need an IBAN to even accept payments on Amazon.
     
    Posted: Jul 14, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  16. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    I also notice that scam was focused on exporting phones outside the UK. The banks asked where I'd be selling and I told them very clearly only within the UK. Guess they think I'm lying. :rolleyes:

    Not allowed to post links yet but there's another article under that linked one saying "Carousel fraud clampdown increases red tape" they got that right.

    @Scalloway looking at your second link it says:

    "The goods used in MTIC frauds are usually high value, easily transportable goods, so that the VAT paid by the innocent Buffer (and stolen by the “missing trader”) can be maximised. Early MTIC frauds involved goods such as computer chips (CPUs), mobile phones, iPods and similar electronic devices, but fraudsters are becoming more creative, and recent cases have involved items such as razor blades, white goods, and even EU Emission Allowances. Given the high value of such goods, HMRC can be defrauded out of significant sums of VAT on a single “VAT carousel” transaction."

    It then further states:

    "In an effort to combat the rise in MTIC fraud, various pieces of legislation have been introduced in the UK over the years. However, this has often proved somewhat ineffective as the legislation has focused on amending the VAT rules for specific types of goods (such as mobile phones, CPUs, telecoms, games consoles and even on supplies of gas and electricity) so that the VAT burden is reversed, meaning that the customer (i.e. the Buffer) has to account to HMRC for the VAT, rather than the supplier (i.e. the “missing trader” Importer). However, when these reverse VAT charges are brought in for specific types of goods, the fraudsters will usually simply move on to using different types of goods in their frauds."

    Why is it mobile phone sellers are still being specifically targeted then, when the scammers have apparently moved onto more valuable items and new VAT rules apparently makes mobiles non-viable for this scam currently? Or razor blades... if I tried to open a company selling razors would I also not get a bank account?

    And in theory this can happen to absolutely any good, so isn't anyone selling anything a potential scammer that can't be touched going by the banks logic?

    I'm just trying to wrap my head around how to get around this roadblock, I seem to be starting from a position where every financial institution is assuming I am a con artist until I can sufficiently prove otherwise.
     
    Last edited: Jul 14, 2018
    Posted: Jul 14, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  17. Mr D

    Mr D UKBF Legend Free Member

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    So you use a personal bank account to get going.
    A real business or not is up to you, not up to what bank account you have.
     
    Posted: Jul 14, 2018 By: Mr D Member since: Feb 12, 2017
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  18. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    I've done the rounds on eBay already, margins are very thin with all the fees from eBay and PayPal. That was the whole point of setting up a company, to get away from them and sell from my own platform. But whether I'm a sole trader or ltd company, if the financial system thinks I am a criminal before I even open my mouth it makes no difference, you can't run a real business off a personal account and they clearly don't want to open a business one for me.

    I will ring around other banks and specifically ask them about working with phone sellers now that I know this is the real issue. Then I will try foreign banks. If all else fails it looks like I'll have to come up with a new bright idea.

    Shame though because me and everyone I spoke to thought this had potential. I'll say it again cryptocurrency cannot become mainstream soon enough. This bureaucracy is a nightmare.
     
    Posted: Jul 14, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
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  19. Mr D

    Mr D UKBF Legend Free Member

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    I didn't mention ebay and its up to you where you go. You are spending less on marketing your own site than ebay charge in fees each month?

    Sorry you think you cannot run a real business from a personal account. That is your limitation.
     
    Posted: Jul 14, 2018 By: Mr D Member since: Feb 12, 2017
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  20. Simple Smartphone Shop

    Simple Smartphone Shop UKBF Newcomer Free Member

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    Yes eBay fees are a percentage of the value of the item sold, phones go for a few hundred quid, then PayPal takes their cut on top, this adds up and makes it nothing more than a hobby unless you can buy in thousands of units a time.

    That is the HMRC's limitation not mine. It is also the limitation of Amazon and credit card merchant accounts. It is not viable to sell outside of the eBay/PayPal bubble online off a personal account.
     
    Last edited: Jul 14, 2018
    Posted: Jul 14, 2018 By: Simple Smartphone Shop Member since: Jun 5, 2018
    #20