Beware Hobbyking product type and customs declarations are no more

[Gavin Mack]

Just received a royal mail card requesting vat and £8 handling fee on a small package from the international warehouse. (items not available in uk or European).
Apparently Hobby king no longer offer product type and customs figure declaration. ordering from the uk and probably European warehouses should be ok. Suggest you add vat and handling charge (approx. £8 royal mail, £15 parcel farce) to see if its still worth placing an order.

Edited By David Ashby - RCME on 17/11/2014 12:36:00

[Martin Harris - Moderator]

Out of interest, what was the value of the contents? Was it over the £15 limit or are you saying that they are making charges on all non-declared packages?

[Pete B]

It's not the size of the packet but the declared value, Gavin. If it was more than £15, it's liable. How much was the order worth?

I hardly think your implied criticism of HK is justified though - the same would apply to any overseas purchase above the Customs figure. Perhaps HMRC are just tightening up on imported purchases?

Agree that the fees are outrageous, though...

Pete

[Gavin Mack]

When placing an order, the value of that order is written on the outside packaging. if value of that order is less than £15 (might be £18 now) then you will not pay vat (import duty) and the handling charge. Above this figure and you will be liable for import duty (vat) and the handling charge. Previously you used to be able to select toy parts and a % of total value to be declared. eg £140 order, declare 10% parcel has £14 written on it and no charges. now £140 would be written hence vat @20% and handling charge added

[Martin Harris - Moderator]

Ah - so nothing has changed except HK have removed the option to...how can I put this...be economical with the facts of the matter.

[Gavin Mack]

I am not implying anything, just making people aware so they don't get stung. I shall still be ordering from hobby king even from the international warehouse but I will be checking pricing to see if it's worth it or wait and see if it appears in the uk warehouse.

[Terry Walters]

IIRC this has been the case for a while now and not new.

Terry

[GONZO]

Been like this from July I believe. Also applies to the rest of the EU personally importing from HK. There's a thread on the HK forum site. I would guess the've(HK) been collectively leaned on by all the EU customs authorities. But, I believe we have the lowest vat free level in the EU at just £15. Import duty does not apply until the cost is significantly higher. HMRC site for ref **LINK** Section 2 of notice 143 is the part of interest.

HTH

[Edmund Comber]

Well I ordered 8 Lipos from what I thought was the UK warehouse for my Outrage G5 - but they actually came from China so I got hit with a £34 bill VAT and collection bill from FedEx - on top of £30 postage. I will not be trusting Hobby King again unless they make the source clearer - unfortunate that no one else seems to do that size Lipo any more.

[Pete B]

Posted by Edmund Comber on 25/11/2014 16:55:19:

I will not be trusting Hobby King again unless they make the source clearer - unfortunate that no one else seems to do that size Lipo any more.

How much clearer can they make it? The words 'International Warehouse' appear at the top of each listing page. As well as that, as has been said time and time again, here and elsewhere, every item's description contains the name of the despatching warehouse in the heading description. If it doesn't contain 'UK Warehouse or 'EU Warehouse' or wherever, it will be coming from the International Warehouse.

In addition to that, when you get to the shipping page, you'd expect the shipping options to be Royal Mail or similar, not International Airmail, SMS, or Air Parcel etc. They won't be using Singapore Post if it's coming from Ipswich, will they?

Sorry, Edmund, I think that's an unjustified criticism and I can't offer much sympathy....

Pete

[GrahamC]

Isn't it technically the case that VAT and duty are due on items purchased from the UK warehouse? Isn't it a 'bonded warehouse'? Doesn't that mean that buyers have a duty to declare that they have personally imported items purchased from the 'UK Warehouse' into the UK? In practice its hard to do... but I can see the rules being tightened up as internet shopping begins to mature.

I've had no issues with duty being charged for items from the international warehouse - but I tend to avoid spending more than about £25 in total - keeping it below the point of economic collection.

I've also spotted the really cheap postage for small items from the EU warehouse. £1.13 for posting a speed controller. I often grab small items from them rather than paying the UK parcel force rates. It's not tracked but everything has turned up so far.

[Dave Hopkin]

The Good are rated for VAT when they enter the UK, and the UK Warehouse will be responsible for VAT returns to HMRC, you as the "end consumer" get charged the VAT on top of the purchase price, in legal terms its no different from buying from your LMS

[Frank Skilbeck]

Posted by Dave Hopkin on 25/11/2014 19:26:29:

The Good are rated for VAT when they enter the UK, and the UK Warehouse will be responsible for VAT returns to HMRC, you as the "end consumer" get charged the VAT on top of the purchase price, in legal terms its no different from buying from your LMS

Not so, HKUK are not a shop, they are a freight forwarder operating from a shipping warehouse (look them up on duedil or companies house, they are registered as Lucky Stuff), you still make the transaction with Hong Kong and they ship via the UK warehouse, which they have preshipped the item too. You are still buying from Hong Kong, ask them for a VAT receipt and their VAT number next time.

[Dave Hopkin]

Posted by Frank Skilbeck on 25/11/2014 22:00:34:

Posted by Dave Hopkin on 25/11/2014 19:26:29:

The Good are rated for VAT when they enter the UK, and the UK Warehouse will be responsible for VAT returns to HMRC, you as the "end consumer" get charged the VAT on top of the purchase price, in legal terms its no different from buying from your LMS

Not so, HKUK are not a shop, they are a freight forwarder operating from a shipping warehouse (look them up on duedil or companies house, they are registered as Lucky Stuff), you still make the transaction with Hong Kong and they ship via the UK warehouse, which they have preshipped the item too. You are still buying from Hong Kong, ask them for a VAT receipt and their VAT number next time.

They are registered with companies house and their turnover is greater than the VAT threshold, therefore are legally obliged to register for VAT whether they supply goods or services, the fact they receive stock for a parent company in HK is irrevelant (though it is a way to avoid corporation tax via transfer pricing)

A legal entity trading in the UK cannot legally simply be a "freight forwarding operation" they are required to be registered with companies house, have named directors, submit audited accounts and pay tax and PAYE (or have an arrangement with HMRC) - In VAT Terms they obey the same laws as a LMS with one significant advantage in that they do not pay retail business rates they pay warehouse business rates which are significantly lower (a tad unfair but that the way the law is)

[kevin b]

Ok chaps, this is how it works.

The Far East Company ships a load of stuff over here to its own warehouse. When it comes through the docks at this end HMRC charge tax and duty based on the COST value of the goods (what the Company paid for them), plus shipping and insurance charges. When you buy from the "UK Warehouse" your transaction is International and the money goes straight to the Far East Company, so the warehouse isn't "selling "anything.

When you buy direct from the Far East Company's International Warehouse, The import tax is a single tax on what you paid RETAIL for the item, plus the handling charge from the shipping company / Post Office.

Obviously buying through the local warehouse means that less tax is paid.

I bet you can't go into the UK warehouse and buy over the counter with cash.

[John Privett]

Posted by kevin b on 25/11/2014 22:55:50:

I bet you can't go into the UK warehouse and buy over the counter with cash.

99.99% sure you can't. Every show I've seen them attend, they've had goods on display but not for sale.

[Dave Hopkin]

Posted by kevin b on 25/11/2014 22:55:50:

Ok chaps, this is how it works.

The Far East Company ships a load of stuff over here to its own warehouse. When it comes through the docks at this end HMRC charge tax and duty based on the COST value of the goods (what the Company paid for them), plus shipping and insurance charges. When you buy from the "UK Warehouse" your transaction is International and the money goes straight to the Far East Company, so the warehouse isn't "selling "anything.

When you buy direct from the Far East Company's International Warehouse, The import tax is a single tax on what you paid RETAIL for the item, plus the handling charge from the shipping company / Post Office.

Obviously buying through the local warehouse means that less tax is paid.

I bet you can't go into the UK warehouse and buy over the counter with cash.

That, as I understand corporate tax law would be illegal OR a very iffy Tax dodge! As the UK Warehouse employs staff it has to be a legal company registered with Companies House, therefore it must submit Audited Accounts, If the UK Company is receiving goods from HK, the UK Operation must "buy" those from the parent, that in tax law is the "Transfer Price" and is an internal transaction, the goods are then as asset of the UK Company and available for sale - as an on-line retailer

Whether your paypal transaction is paid direct to HK or not doesn't alter the fact that the UK Warehouse have sold an item and that transaction has to be represented on the accounts for Corporation tax purposes - if the transactions are not represented on the audited accounts that is Tax Evasion and illegal - If however the transfer price is set to high as to eliminate any profit on the UK Sale, then thats (sadly) legal and called Tax Avoidance - they do that (Starbucks are a prime example) as Corporation Tax is paid on Profits not Turnover

[Paul Jefferies]

It's simple really, the reason HK are able to offer such low prices is because, by doing what they do, they can use Chinese products, use Chinese labour sell here without paying tax. The reason so many of our model shops have closed, and more surely will, is because they have to pay UK overheads and have to charge VAT.

This is just one small part of a much bigger picture but by always going for the cheapest deal we have shot ovselves in the foot. My local model shop closed about three years ago and now I have to travel over 20 miles to the nearest shop and even then they can't afford to stock everything I need. They call it "progress"........

[Barrie Dav 2]

From the above comments, I take it that the UK and European warehouses are not bonded warehouses then. Have we any tax experts out there who can give us the exact position on this matter?

[Jim Mchugh]

My experience:

I wanted this covering film: **LINK**

Couldn't find this film "Brushed Aluminium" stocked in any other retailer... ANY IDEAS?

Cost £6-ish, but only stocked in "International" - Hong Kong.

Hobbyking wants £18(!!!) for delivery from Hong Kong.

Eventually bit the bullet... but added a motor (£13) and an ESC (£10) to justify delivery cost!

Then HMRC charged me £17 import duty on the whole parcel!!

£6 + £13 + £10 = £29 of goods

£18 + £17 = £35 of delivery / tax charges!

Hobbyking are going to shoot themselves in the foot...

[Dave Hopkin]

Posted by Barrie Dav 2 on 26/11/2014 08:39:54:

From the above comments, I take it that the UK and European warehouses are not bonded warehouses then. Have we any tax experts out there who can give us the exact position on this matter?

Even if it were a bonded warehouse it wouldn't alter the transactional status between and end customer and the supplier, the "Bonded Warehouse" exists to allow goods to be held without duty being levied provided the goods are either re-exported, destroyed or used to re-victual a vessel or aircraft.

As soon as the good leave the warehouse for any other purpose the duty is applied.

[Pete B]

Since Giantcod came onto the market back in 2007 or thereabouts and HK opened the UK Warehouse two or three years back, this issue has been under very public discussion ad nauseam.....

I find it hard to believe that no-one in the UK model business has ever raised the matter with HMRC, given the howls of anguish from LMSs when HK UK started trading. I also do not believe that HMRC are so blind or incompetent as to allow a flagrant breach of VAT rules to continue unabated, yet there has been a deafening silence from the authorities.

From that, I can only assume that HK have found a legitimate path to the UK market or, for reasons known only to themselves, HMRC cannot or will not act against them. Why would that be?

If anyone feels particularly upset by it, why not approach HMRC directly for a definitive answer rather than continually re-hash the same old moans? You'll not get the answer here - from the number of threads that have been devoted to the subject, that's quite clear.

If your principles are offended, the answer is simple - don't use them - but please don't infer that those who do are somehow engaging or supporting some sort of criminal activity....

Pete

[Barrie Dav 2]

Agreed Pete

[Cuban8]

Does the value for customs include the charge for postage?

My wife and I order quite a few bits and bobs from overseas retailers and have only rarely incurred charges on those orders. If the authorities don't bother to collect taxes and there's no suggestion of evasion or impropriety, then that's OK with me.

[Olly P]

Hi Cuban8 - the customs value is calculated including shipping, as it is assumed that this is now part of it's value if it is resold.

There is an EU agreement on minimum value before anyone charges import duty, and generally VAT will fall into the same category. This will also be used as a 'not worth the cost of doing it' calculation - i.e. anything worth less than X will only return Y in tax and it will cost Z to administer - if Z>Y then not worth doing.

Theoretically they can claim it back for upto 7 years, in real terms it costs more to do than it is worth.