VAT charge from FedEx on import from China

[Westie99]

I ordered some products from China and paid the supplier 20% VAT on the total. They were delivered by FedEx, who have sent me a letter saying I am due to pay them 20% VAT plus a £10.01 disbursement fee.

I have advised FedEx that I have already paid the VAT to the supplier in China, but their response is that the bill is correct. The goods were paid for in US Dollars, but Fed EX have also just taken this amount and changed it to GB Pounds, without taking into effect the difference in exchange rates.

This is the first time I've bought goods directly from China, so I would appreciate any advice on this situation, and how best to proceed.

 

[Customs Geek]

Hi Westie99

The only reason a supplier in China could / should charge UK VAT is if the shipment is below £135 and they show their UK VAT registration number. This would not however apply if you are UK VAT registered yourself and provided them with your VAT number. This is under the special procedures for low value shipments. No VAT or customs duty should be charged on import.

www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk

In other cases import VAT and import duty will be charged at import. FedEx will usually pay this for you and then ask for payment as seems to be the case here.

If the invoice is in USD this should be converted to GBP using the customs monthly exchange rate. If not already included in the invoice price the cost of shipping will also be dutiable and subject to VAT .

If FedEx have not recognised that the invoice is in USD then they should correct this.
Equally if the low value special procedures should have applied they shouldn’t be charging the import VAT.

 

[Westie99]

Hi,

Thanks for the information about the rules on this. I've checked my invoice for the order and it is showing:

Cost of goods $130 USD
Express Shipping $80 USD

VAT charged $42 USD

Total Due $252 USD

I paid the Chinese supplier the $252. It looks like the £33.36 payment FedEx are asking for is the equivalent of the $42 USD VAT I paid.

Am I correct in thinking that if I can show this invoice to FedEx to confirm I have already paid the VAT, they will cancel the charge they are asking me to pay?

 

[AlanJ1]

Hi,

Thanks for the information about the rules on this. I've checked my invoice for the order and it is showing:

Cost of goods $130 USD
Express Shipping $80 USD

VAT charged $42 USD

Total Due $252 USD

I paid the Chinese supplier the $252. It looks like the £33.36 payment FedEx are asking for is the equivalent of the $42 USD VAT I paid.

Am I correct in thinking that if I can show this invoice to FedEx to confirm I have already paid the VAT, they will cancel the charge they are asking me to pay?

Only if they show there UK VAT number if they have one.
If not, pay Fedex before this becomes more hassle than it's worth because they will continue to seek payment from you.

 

[Socio South West]

Am I correct in thinking that if I can show this invoice to FedEx to confirm I have already paid the VAT, they will cancel the charge they are asking me to pay?

If there is a valid VAT registration number on the invoice yes.... if not.... no, and I'm afraid it would look like your Chinese friends have shafted you to the tune of 20% in that case.

You will probably find that when you go back to your Chinese friends they will have conveniently have forgotten the excellent English they used with you during the sale process.

 

[Westie99]

I ordered the items through alibaba.com. I've just discovered they have an option on their site to reclaim the VAT when it has been double charged, so I'll pay FedEx and try to reclaim what I have been charged by the Chinese seller.

I'm not holding out much hope, but it's worth a try.

 

[Customs Geek]

I ordered the items through alibaba.com. I've just discovered they have an option on their site to reclaim the VAT when it has been double charged, so I'll pay FedEx and try to reclaim what I have been charged by the Chinese seller.

I'm not holding out much hope, but it's worth a try.

The UK legislation requires an overseas seller or the platform to register for VAT and charge UK VAT for shipments below £135 so they must show a UK VAT registration number . They should also tell you how much VAT in GBP.

In reality HMRC have no real way of enforcing this other than the courier blocking the shipment, so it’s another way for unscrupulous independent sellers to get another 20% out of unsuspecting customers.

It is also possible FedEx have declared the goods incorrectly and the Chinese seller is properly registered . It could be that the value of the goods themselves wasn’t clear so FedEx think it’s a shipment value over £135. $80 sounds a lot of shipping cost to pay so that may have something to do with it. If the goods are above £135 they must charge VAT and customs duty at import.