Import relief for small business

Discussion in 'International Business' started by someUKBusPerson, May 17, 2019.

  1. someUKBusPerson

    someUKBusPerson UKBF Newcomer Free Member

    3 0
    We are looking to import some small items from outside the EU (china), and re-export them through online sales. Our customers are worldwide, including US, China. We don't yet have an EORI, but we plan to get one. We are below the VAT registration threshold, and plan to use cash accounting.

    I understand that you can apply for VAT relief for up to 6 months (maybe one year) using inward processing, and claim the VAT back, e.g using an SP3 form. However, our parcels we plan to import are small, and we are hoping to import them by post infrequently (a few times a year). We can estimate our yield, to work out how much gets split between the EU (VAT required) and ex-EU (no VAT).

    Its not clear to me how we can actually claim the relief back once we do the above (assuming thats all right), and how we match our shipment against the SP3 claim. How does this work?
     
    Posted: May 17, 2019 By: someUKBusPerson Member since: May 17, 2019
    #1
  2. CHUKTC

    CHUKTC UKBF Contributor Free Member

    76 11
    Why not ship direct from China to your customers - it will save problems with not only VAT but duty too, save on double shipping costs, and save on unnecessary currency exchanges.
     
    Posted: May 18, 2019 at 10:29 AM By: CHUKTC Member since: Jan 2, 2019
    #2
  3. Mr D

    Mr D UKBF Legend Free Member

    13,754 1,507
    Yes that works for cheap stuff. Though customers faced with a bill in addition to what they have already paid may well refuse the delivery and demand payment back.
     
    Posted: May 18, 2019 at 10:43 AM By: Mr D Member since: Feb 12, 2017
    #3
  4. someUKBusPerson

    someUKBusPerson UKBF Newcomer Free Member

    3 0
    We would very much rather not ship from china. These are products manufactured to our specifications, and are technical products (not home consumer goods, more B2B).

    The concern is the ability to
    1) QA products & reject if needed
    2) Ship in a timely manner
    3) Store (items are very small <1m^3 per large batch)
    4) Calculate correct shipping costs ex our business to customer (ex duty & tax etc)

    We anticipate duty to only be ~6%, which is OK. Its duty + VAT at ~26% thats a bit more of a concern.
     
    Posted: May 18, 2019 at 11:45 AM By: someUKBusPerson Member since: May 17, 2019
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    13,754 1,507
    Can always avoid VAT by not bringing items within EU or use a bonded warehouse and sell outside the EU.
     
    Posted: May 18, 2019 at 11:55 AM By: Mr D Member since: Feb 12, 2017
    #5
  6. Tom Gardner

    Tom Gardner UKBF Contributor Free Member

    44 1
    go to the gov.uk website and search inward processing, this explains the rules.

    Personally unless you are going to actually carry out some form of process on the goods I'd rent some space in a 3Rd party Custom warehouse. Be cheaper and less paperwork
     
    Posted: May 23, 2019 at 3:57 PM By: Tom Gardner Member since: Dec 9, 2017
    #6
  7. someUKBusPerson

    someUKBusPerson UKBF Newcomer Free Member

    3 0
    I've looked at the IP on gov.uk, its quite unclear on calculation and payment, and it looks like we need a customs expert to work out how to actually pay and reclaim the tax through the C88 (?).

    Ultimately, we might just try to get the QA done in China, and work with our customers to make this acceptable. It seems keeping products away from UK VAT will greatly reduce paperwork.

    I can't seem to find posted order-of-magnitude costs for bonded warehouse facilities. I anticipating we wont be spoken to for less than a few thousand pounds. As stated originally, we are a small business (below VAT registration threshold).
     
    Posted: May 23, 2019 at 4:05 PM By: someUKBusPerson Member since: May 17, 2019
    #7
  8. Tom Gardner

    Tom Gardner UKBF Contributor Free Member

    44 1
    don't be fooled into thinking you need an expert to operate a customs relief - people will tell you horror stories just to make money out of you. Hundreds of bussinesses operate the regime daily without a problem.

    Just read the guidance and if you have any questions contact HMRCs Customs helpline for free advice. I've used them loads of times without any issues.

    For warehouse pricing you will need to contact agents, individually, at the Port of entry for a quote
     
    Posted: May 23, 2019 at 4:44 PM By: Tom Gardner Member since: Dec 9, 2017
    #8