Since the UK voted to leave the European Union, there have been a lot of changes when it comes to customs rules and regulations. One area that has seen a lot of change is the process of reclaiming VAT on EU purchases.
In this article, we will explain how Brexit has affected customs duty and who is now eligible for a refund of customs charges. We will also outline the steps you need to take to get your money back!
How Did Brexit Change UK Customs Charges?
After the Brexit transition period, import taxes, duties, and handling fees have been applied to goods purchased from the EU and other countries, making online shopping from Great Britain more expensive.
The exact amount paid on imports depends on many factors, such as the type of imported goods and the consignment value.
We will go over each fee and explain what it is and how it is calculated.
What Are Customs or Import Duties?
The customs duty is a tax on goods imported into Great Britain from the EU or overseas. This duty is only payable if the value of the imported goods is greater than £135. The courier will pay this fee on your behalf and notify you about the cost.
It is calculated based on the value of the goods and their classification under the UK Tariff schedule. For example, clothing is subjected to a fee of 12%. The customs duty is charged by HM Revenue & Customs (HMRC) and is payable when the goods are imported into the UK.
The “rules of origin” agreement between the UK and the EU countries exempts you from paying customs duty on items of EU origin. So if you think that you weren’t supposed to pay these duties, ask the seller for proof of origin.
What Is Import VAT?
The import VAT is a value-added tax charged on goods imported into the UK from outside the EU. Instead of paying normal UK VAT, which applies to all goods bought in the store, you have to pay import taxes. It is based on the value of the goods plus any handling fees. The rate of import VAT is 20% – the same rate as regular VAT. You can pay a reduced rate of import VAT on collectors’ items, antiques, and art.
What Are Handling Fees?
In addition, a handling cost may be applied – it is a fee charged by the courier for customs handling. The courier will pay import VAT on your behalf and other charges. This cost can vary depending on the courier, but it is typically a few pounds per item. The courier will send you an email with payment details.
If you refuse to pay import VAT and the handling fee, the courier will not deliver your parcel. The goods can be delivered without payment of these charges only if the deferment account is opened with HMRC.
What About the Gifts?
The same customs fees apply for gifts sent from the EU. In certain circumstances, the final amount to be paid is higher for gifts than when the person buys the items from the EU retailer.
For gifts worth less than £39, you should be exempt from paying any of these duties, import VAT or handling fees. You only have to pay VAT for gifts worth more than £39. The handling fee will also have to be paid, but customs duties do not apply to gifts of this value. Customs duties are only paid for gifts worth more than £135, and for that above £630 you need to pay the same duty as for normal imports.
If you plan to send a gift to the UK, remember to attach the proper customs declaration form, clearly state on the customs declaration form that it is a gift, and wrap gifts individually if they are for different people.
Who Can Claim a Refund of Import VAT and Duty?
Refund of Customs Charges on Returned Goods
In the United Kingdom, if an item is not returned or refunded, the customer is not eligible for a refund of customs fees. However, if the item is returned, UK customers are eligible for a refund of customs fees, and it will be based on the value of the item at the time of purchase. Retailers have to give customers partial or full refunds for returned goods.
Moreover, private individual is eligible for a repayment of import VAT if they think they have been overcharged. Keep in mind that courier handling fees or shipping fees will not be refunded in this case.
As excise duty and special rules apply, you cannot get your money back for certain goods, like alcohol and tobacco.
Refund of Customs Charges on Faulty Goods
The Consumer Contracts Regulations give you 14 days after receiving your items to cancel an order.
If you received your parcel but are unsatisfied with your purchase, according to Consumer Contracts Regulations, you have extra two weeks to return the parcel to the retailer.
If you receive a faulty item, the Consumer Rights Act gives you 30 days to decline the parcel and get your money back. After those 30 days, the retailer has the right to replace the faulty product. According to the Consumer Credit Act, your credit card provider has to give you a refund if you have paid online for the defective item from the EU retailer.
How to Claim a Refund of Customs Charges
In this part, we would like to talk about the process of reclaiming import VAT and duty. It can take up to five weeks or more for your request to be processed. Paperwork errors can further prolong the process, so it’s important you do everything correctly when filing!
Reclaim Import VAT and Customs Duties on Your Own
The documents needed to claim back import VAT and customs duties are:
- Confirmation of return from the seller
Firstly, you will have to ask for a return confirmation from the seller. This document is proof that you have returned the goods to the seller, and it states that the goods will stay in the EU. The original invoice number and customs tariff number pointing to the type of goods should be noted on the document. If you have lost the original invoice, ask the retailer to resend it.
The seller should also send the proforma invoice in which it is clearly stated that you are the exporter and the reason for returning the goods. The customs tariff number and customs declarations on this document should align with the letter of return confirmation.
Keep in mind that you can ask for UK VAT return if the business or shop is registered for VAT.
- Courier documentation
Certain courier companies send the needed documentation along with the parcel, but in other cases, you need to contact the courier, provide the Tracking ID and ask for import documentation. Then the courier will send you the entry advice, itemised taxes and shipping invoice. In many cases, for the itemised taxes, the courier will name only brokerage and government charges, and it will be up to you to figure out the breakdown of these fees on your own.
- HMRC Form C285
Filling the main customs form on the gov.uk website is the most important step.
The CHIEF claims are used in international trade, and the form you should complete is C285.
The customs declaration service or CDS can also be used to import goods, and for all exports and imports, a movement reference number or MRN is issued in the declaration. This form should not concern you, as you do not need it for your VAT return.
Keep in mind that the website doesn’t check whether the input information is valid, so it is your responsibility to ensure that all the information you provide on the form is correct.
The following information will be needed:
- Personal details
- Representative details or details of the courier company that delivered the parcel.
- Details about the goods, such as type and supporting evidence (entry, invoice, or airway bill number)
- Details about repayments and remission
- Payment details
- Declaration
You will also have to state why you are applying for the refund (overcharged, special circumstances, or returned goods.
Once the form is completed, print it out, sign it, and send it along with the customs declaration and the other documents to HMRC.
It can take up to five weeks to receive a VAT return, and that’s if everything goes smoothly without any issues along the way. HMRC won’t usually notify you if your request has been denied.
Reclaim Customs Charges With Duty Refunds
Luckily, you can get your money back through a freight forwarder or agent. Duty Refunds make it easy to get back any duty or import VAT paid on your purchase.
Duty refunds are a great way to save money on your international purchases. Duty Refunds provides an easy and secure service for UK customers who want to reclaim import VAT or import duty for goods they returned.
Here is how the process with Duty Refunds works:
- Check eligibility
Answer a few simple and short questions on our website to check whether you are eligible for the VAT return and how much money you can receive.
We need your email, cost and description of the goods, tracking number, and courier company to give you the estimate.
- Initiate the process
Duty Refunds will require your details and tracking or waybill number to initiate the process.
You will also be asked to upload proof of refund. If you do not have the courier documents, do not worry – we will send a request to the courier on your behalf.
Once we have all the documents, we will complete and send the repayment claim to HMRC.
On our website, you can track the status of your claim.
- Enjoy your refund
In 3 to 4 weeks, we will notify you about your request. Once it is approved, we will ask for the bank account number on which you want to receive the money.
Final Thoughts
This article outlines how much you need to pay when importing and who is eligible for a VAT return after the Brexit transition period. Reclaiming VAT or imports can be a long and challenging process. However, if you do not have the time or patience to go through the process on your own, a freight forwarder or agency can help.
Duty Refunds can help you understand how much you need to pay when you are importing goods and how to reclaim any import duty or import VAT that was paid on your purchase. We have a no-win, no-fee policy, and our commission fee is only 15% of the returned amount if the claim is approved.
If you need any further information about reclaiming duty and VAT or our service, feel free to contact us. We would be more than happy to help you get your refund.