Ship into UK from China using DDP - Import and VAT query

[Bandk]

Hi all, I hope someone can advise with a shipping query.

I am in the process of sourcing my second product. I used FOB terms with my last supplier and my freight forwarder (based in UK) used my EORI number and billed me the import duty and VAT once billable.

I have had quotes this time round using FOB from my usual freight forwarder but checked others using DDP terms and it works out a lot cheaper as it includes all the fees as one price. I would be paying for example £490 shipping and a further £350 duty and tax on FOB with my own EORI. The DDP quotes are around £600 as they use their own EORI and VAT, they are the importer of record as I understand. (A freight forwarder in china)

The question I have really is this allowed and legal? Can my freight forwarder use their own EORI and clear all the duty and VAT? If so I would pay quite a bit less so just making sure there is no down side to this. Is the stock legally mine and how is it that there is such a difference in price?

P.S I understand that I wouldn’t be able to claim back VAT but as I am relatively new, I am not VAT registered.

Appreciate any help

 

[Deleted member 351022]

What you describe sounds unusual so I would double check exactly what your supplier means by DDP and exactly what costs are included so you don’t get any surprises. Many sellers do not include VAT when they say DDP and will use your EORI as it is very difficult for an overseas business to act as importer in the UK. A UK shipping / customs agent will act as the customs representative then invoice any duty to the supplier and the VAT to the recipient if that is what has been agreed.
It would be very unusual for a freight agent to use their own EORI to act as the importer in their own name. It is however normal for an agent to use their duty account and pass costs back to their customer as a disbursement.

Only a VAT registered business who is the owner of the goods can reclaim import VAT so a freight agent who is not party to the transaction can not reclaim import VAT.
An overseas freight agent who does not have a legal entity in the UK cannot legally be an importer or customs representative.

The point where change of ownership of the goods should take place should be contained in your purchase contract.

 

[Bandk]

Hi @Customs Geek, appreciate your reply.

The freight forwarder is based in china. The DDP terms are stated and ive clarified - "
DDP Shipping (Delivered Duty Paid), including all taxes, tariffs, and customs charges"

- The freight company will pick up the goods from my manufacturer and then deal with all the rest

When pressing them for clarification on UK import duty and VAT, they state:

• Import Duties & VAT: We will use our EORI and VAT to do the customs clearance with other clients' goods, so we will not share the taxes bill with you. If you need to know it, we can move to DDU.

 

[GraemeL]

There used to be a sticky on this forum setting out the issues with each type of import method.
Be warned that with DDP the FF at the UK end will not be chosen by you, but by the sender. It has been common to be stung with a bill from that FF in order to release your goods. @Import Expert can explain better than I. And you wont have any other choice but to pay.

 

[Bandk]

Thanks, I am just thinking now to go with DDU so that I will be responsible for the duty and VAT, at least that way I can be sure the right amounts have been paid and I cant get in trouble in the future. The freight forwarder will be responsible for the other costs, hoping this will be fine

 

[Deleted member 351022]

Check whether you really mean DDU as is an old Incoterm rule. It was replaced in 2020 by DAP (delivered at place) so again check what you are agreeing to to make sure that you don’t get caught by unexpected charges particularly at port of arrival.

Freight forwarders are not usually responsible for costs, it will be either the buyer or seller who the freight forwarder will charge for their services depending on what has been agreed.

I recommend that if you are responsible for the import declaration and taxes and duties that you find your own customs agent to help with the customs clearance process .