Dismiss Notice
Hey Guest, make sure to follow us on Twitter! Say hi and we'll be sure to follow back!

Shipping direct from china

Discussion in 'International Business' started by PGTV, Feb 18, 2018.

  1. PGTV

    PGTV UKBF Newcomer Free Member

    6 0
    hello. We are a uk company. At the moment we import products from China, we pay the vat/duty (which we reclaim the vat on our returns). We then resell the goods at the standard 20% vat. (Uk to Uk)

    However my question is: if we despatch the order directly from China, and the customer acts as the "importer", how do we account for this? Is it still standard rate at 20% or is it zero rated? (I.e. China to UK)

    The value of the goods would probably fall below the custom level, so highly likely the customer will not be paying any costs to receive their goods.

    The same question also applies if the goods are despatched from China to a country outside of eu - i.e.: ship from China to USA. I would assume that would be zero rated.
     
    Posted: Feb 18, 2018 By: PGTV Member since: Jul 5, 2017
    #1
  2. kosinjames

    kosinjames UKBF Newcomer Full Member

    1 0
    I bought lots of good on ebay that got directly shipped from China. There must be some incentive for them to do this. But what?
     
    Posted: Feb 22, 2018 By: kosinjames Member since: Nov 23, 2017
    #2
  3. The Sourcing Division

    The Sourcing Division UKBF Newcomer Free Member

    24 1
    If the value is low then the customer, as you say, is unlikely to pay any import duty/VAT.

    However the sale is between you (a UK VAT registered entity) and the customer (a UK citizen) so you still need to charge 20% VAT on the sale. It doesn't matter where the goods are being sent from, the sale is between you and the customer who are both UK based.
     
    Posted: Feb 23, 2018 By: The Sourcing Division Member since: Feb 17, 2016
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    7,419 775
    Postage costs from china are lower than royal mail costs.
     
    Posted: Feb 23, 2018 By: Mr D Member since: Feb 12, 2017
    #4
  5. nick34785

    nick34785 UKBF Contributor Free Member

    88 3
    This is not correct. These sales are out of scope of VAT as the goods are not supplied inside the UK (or EU).

    https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-goods/vatposg2100

    https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-goods/vatposg3300
     
    Posted: Feb 24, 2018 By: nick34785 Member since: May 25, 2014
    #5
  6. Maple Sourcing

    Maple Sourcing UKBF Regular Full Member

    318 67
    It will only work for light/small and relatively high margin items, and lead time is affordable. I have some friends who sell electronic accessories on "WISH", they sell an iPhone cover at $3 all inclusive price, incredible, right? Because they use China Post sea parcel, lead time is 15~30 days globally.
     
    Posted: Feb 27, 2018 By: Maple Sourcing Member since: Oct 8, 2012
    #6
  7. The Sourcing Division

    The Sourcing Division UKBF Newcomer Free Member

    24 1
    So I could start a china dropshipping business with a turnover of say, £100m and not pay a penny in VAT?
     
    Posted: Feb 27, 2018 By: The Sourcing Division Member since: Feb 17, 2016
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    7,419 775
    Who would be importing the items into the EU?

    You or the buyer?

    And just think of buyers refusing to pay additional charges so items get returned to sender or stuck at customs. And buyers ask for a full refund including shipping costs.
    You may want a turnover of £100m but may take a while getting there using dropshipping. Your sales numbers may well be lower than the sellers who aren't dropshipping as they can undercut you due to cheaper item purchase.
     
    Posted: Feb 27, 2018 By: Mr D Member since: Feb 12, 2017
    #8
  9. nick34785

    nick34785 UKBF Contributor Free Member

    88 3
    Yes, the buyer would be importing to the UK and be liable for VAT on delivery .

     
    Posted: Mar 4, 2018 By: nick34785 Member since: May 25, 2014
    #9
  10. Mr D

    Mr D UKBF Legend Free Member

    7,419 775
    And if the buyer refuses to pay the VAT, plus admin charge (£8 last I looked) the item is returned to you.
    Buyer gets a full refund including shipping. You may well have costs to have the item returned to sender.

    Oh and you aren't selling on amazon uk.
     
    Posted: Mar 4, 2018 By: Mr D Member since: Feb 12, 2017
    #10
  11. nick34785

    nick34785 UKBF Contributor Free Member

    88 3
    That might happen. I'm just saying that you can't charge VAT if selling a product that is shipped from China (unless you set up some kind of DDP delivery method).
     
    Posted: Mar 5, 2018 By: nick34785 Member since: May 25, 2014
    #11
  12. Mr D

    Mr D UKBF Legend Free Member

    7,419 775
    No, you cannot charge VAT if you aren't registered for VAT.

    Customs can charge import duty & VAT of course. Plus the £8 admin charge. Unless its already paid.
     
    Posted: Mar 5, 2018 By: Mr D Member since: Feb 12, 2017
    #12
  13. nick34785

    nick34785 UKBF Contributor Free Member

    88 3
    Do you mean that you could charge VAT even when the sale is out of scope of VAT if you are registered for vat?
     
    Posted: Mar 5, 2018 By: nick34785 Member since: May 25, 2014
    #13
  14. Ecowritingtablet

    Ecowritingtablet UKBF Contributor Free Member

    42 2
    we ship many goods worldwide by courier, the agent can always help us by reducing the order value,then the receiver almost does not need to pay any tax.
     
    Posted: Mar 28, 2018 By: Ecowritingtablet Member since: Mar 14, 2018
    #14
  15. GraemeL

    GraemeL Pain in the neck? Full Member - Verified Business

    4,899 1,046
    This is illegal.
     
    Posted: Mar 28, 2018 By: GraemeL Member since: Sep 7, 2011
    #15
  16. Mr D

    Mr D UKBF Legend Free Member

    7,419 775
    Tax evasion?
    What do you think the tax office do when they catch this?
     
    Posted: Mar 28, 2018 By: Mr D Member since: Feb 12, 2017
    #16
  17. Ecowritingtablet

    Ecowritingtablet UKBF Contributor Free Member

    42 2
    I believe quite many shipping agent in China do this to help export.
     
    Posted: Mar 30, 2018 By: Ecowritingtablet Member since: Mar 14, 2018
    #17
  18. Ecowritingtablet

    Ecowritingtablet UKBF Contributor Free Member

    42 2
    destory them or give the receiver some fine? I know one American client who ask to put 50% of real value on invoice. Business is hard, it is not surprising that they reduce some tax. that is only my point of view.
     
    Posted: Mar 30, 2018 By: Ecowritingtablet Member since: Mar 14, 2018
    #18
  19. GraemeL

    GraemeL Pain in the neck? Full Member - Verified Business

    4,899 1,046
    It is illegal
    Clearly it is not just a point of view, you see at as 'help'. You should be telling everyone not to allow this to happen.
     
    Posted: Mar 30, 2018 By: GraemeL Member since: Sep 7, 2011
    #19
  20. Ecowritingtablet

    Ecowritingtablet UKBF Contributor Free Member

    42 2
    correct. they should not do it. I heard of this from different person though. What are the other guys' point?
     
    Posted: Mar 30, 2018 By: Ecowritingtablet Member since: Mar 14, 2018
    #20