The name that shall not be spoken!

[Erfolg]

Dave

The issue you raise has been with us in various forms for a long time, perhaps from the first time taxes were levied.

In my youth (early 20s) I worked for a USA company, that have various divisions around Europe. At the time Harold Wilson (Labour) had some form of currency controls in place. Within the company, it was known (or suspected) that the pricing strategy helped in the transfer of profits out of the UK.

In the case of HK the main issue is that the LMS is the end link in a convoluted chain, which increases costs and taxes due, for no good reason, other than this is the UK model trade model. HK misses out (so it appears) most of the chain. I addition the starting price in the Chinese depot is a very small fraction of UK prices. Bare in mind, these prices have a profit built in. Is it any wonder that they are so much more cost efficient.

I remember seeing a programme about the Llyons Corner Houses (coffee shops), their original model was broadly similar to HK, being a family at both ends of their chain. Once it became a listed main stream business, these initial advantages disappeared, as suddenly a convoluted chain appeared.

In the case of companies such as Starbucks, many detractors choose to ignore the myriad and scale of taxes actually paid. We should recognise that many woman will pay for a brand name, and the holder of the name expects to be paid for its use, often arranging there affairs to recognise that the maintenance of this asset and intellectual property is held in a favourable jurisdiction, in fact we modellers will in some cases pay handsomely for a label, oh dear, not just woman it seems.

In my case I wonder why many think that the service side should reap the Lions share of the profits, rather than manufacturers. Yet in the case of model products, the problem is an inefficient retail system.

[kc]

The point is are we really buying from abroad? If the goods are shown as in stock at UK warehouse, the details appear on my computer monitor in my UK house, and I make the decision to buy whilst in UK, then the goods are despatched from UK then surely the whole transaction is done inside the UK and VAT should be the same as at a local shop.

If my local model shop said these are the goods and they include VAT but if you go out into the street and use your iphone to order them on my EBay site which is run by my wife who happens to reside in Monaco, when she confirms she has received your money come back into the shop and I will hand over goods I am holding on her behalf. The discounted EBay price will be because we dont need to charge VAT on the markup. Would it be legal? It would appear so if this is what is being done now.

A few months ago a clubmate told me he attended HK open day at their airfield warehouse site, he noticed a queue of people outside the warehouse building and assumed they were queuing for the toilets but then he noticed that people were ordering on a computer and then walking across to the warehouse and queing to collect their goods! Isn't that just the same?

[Pete B]

The fact is, Hobbyking has a working - and legitimate - business model in the UK until the Govt and HMRC decide otherwise. Morals don't come into it - it's business.

The UK trade and others upset by this really should be attacking the problem of the unlevel playing field, not the players.

Pete

[pete taylor]

Posted by kc on 29/01/2015 12:12:42:

The point is are we really buying from abroad? If the goods are shown as in stock at UK warehouse, the details appear on my computer monitor in my UK house, and I make the decision to buy whilst in UK, then the goods are despatched from UK then surely the whole transaction is done inside the UK and VAT should be the same as at a local shop.

If my local model shop said these are the goods and they include VAT but if you go out into the street and use your iphone to order them on my EBay site which is run by my wife who happens to reside in Monaco, when she confirms she has received your money come back into the shop and I will hand over goods I am holding on her behalf. The discounted EBay price will be because we dont need to charge VAT on the markup. Would it be legal? It would appear so if this is what is being done now.

A few months ago a clubmate told me he attended HK open day at their airfield warehouse site, he noticed a queue of people outside the warehouse building and assumed they were queuing for the toilets but then he noticed that people were ordering on a computer and then walking across to the warehouse and queing to collect their goods! Isn't that just the same?

The key element is where the TRANSACTION took place; in the case of Hobbyking, the transaction takes place in Hong Kong, regardless of where your computer is located. No doubt about it - you are buying from Hong Kong directly and the goods are supplied from a stock already held here in the UK in preparation for your custom. One of the benefits of instant comunication and global finance I guess!

Hobbyking aren't unique in this...Amazon, Microsoft and a whole heap of other companies do exactly the same from varios locations throughout the world.

Anyone so inclined can quite lawfully take advantage of this situation, whether based in Belgium, Bolivia, Botswana or the People's Republic of Bognor!

 

Edited By pete taylor on 29/01/2015 12:55:03

[Erfolg]

KC

I cannot see why you question if your order is not a UK order. You see a UK price, the goods have attracted UK taxes. The vat paid will be the same rate as the LMS, that is 20%. What is different is that many of the steps will have to the LMS have been omitted, which we keep stating increases the tax paid, for no good reason. It is also possible that the import value will also be different.

I keep saying much the same, the reason your Local Grocery Store as operated up to the 60s have all but gone, is they were at the end of an inefficient supply chain, compared to the Super Markets, that swept them away in the original form. Some formats did survive, such as the Co-op, which was a modified retailing model compared to the CS and organisations such as Spar (to save) which operated a collective buying strategy.

As for goods coming from within the EU, it was supposed to be a Common Market, although recently ther does appear to be a retreat from this, for the public. Seems that the EU are every bit as desperate to increase taxes as drug addicts need their fix.

I am not sure where the problem is with respect to the entering the details into a computer is, I am assuming it is all part of stock control. It is pretty much the same as when I go to both Screwfix Direct and Toolstation, all much cheaper than the local DIY shop or B&Q. Yet I am sure that again some will see this as tax avoidance as the vat is lower for the same goods, because the charged value is also lower.

[Dave Hopkin]

Pete Taylor is quite correct - apart from the (Tongue in cheek) country list, if the transaction takes place in an EU country then "Distant Trading" VAT rules apply and the VAT rate in the country of original is levied - so basing your transactions in Belgium or Bognor (for gods sake why would want to be based there!!!!) then VAT would be levied, either the Belguim Rate or that applicable in the Independent Republic of Bognor....

But if your transaction takes place in a Non EU Country then VAT (an EU wide tax) is not applicable - import levies are a different story of course (and are designed to off set the loss of VAT to HMRC, but generally fail to do so)

[kc]

Erfolg, the VAT is not the same! The rate is the same but it's not levied on the sellers markup when buying from a foreign based seller but it is when sold by a UK seller. So it's nothing to do with efficency -it's not a level playing field. Model shops stand no chance.

[Erfolg]

I do not see where the problems is with respect, that the stock list may be in China, or where ever. The items are in the UK, the vat charged are those set in the UK, on the value of the goods as declared when imported.

As far as I can see for many of our modelling items they are not subject to Import Duty. Most UK political parties, spout the claim as being in favour of "Free Trade". In the case of modelling goods, in general, there are not even any UK based modelling manufacturers of great note, to protect with Import Duties. It would be just another tax on top of VAT.

I get the impression some are struggling to find a reason beyond the antiquated UK model for hobbies stuff distribution, as to why LMS items are so comparatively expensive, compared to HK.

I have just had a can of Pepsi, it cost just about 60p, compared to approx. 10p for a Supermarket own brand. My wife is happy to pay an extra 50p for the label. The value of the brand comes from the parent company, and I can bet, that the UK canning facility pays the USA company handsomely for putting the name on the can, as without it the can is only worth 10p. I can aslo bet that the arrangements to be allowed to use the name were not organised in the UK and probably payments are made overseas for the privilege, where in this case the standing of the brand is maintained.

[Dave Hopkin]

Also the LMS pays Local Rates as retail premises, whilst an internet trader pays warehouse rates which are very much lower, so the odds are stacked against the LMS

[Erfolg]

KC , with all due respect, the situation is the same, items are imported at a declared value. What the value of the item is determined by the manufacturing costs, plus all the other costs either incurred or added prior to import does not matter. What matters is the value as declared, plus the additional costs incurred and charged within the EU which are subject to Vat.

If it costs someone more to import, that is their problem, if it costs more to distribute that is their problem. It is not cheating in any way to be more efficient.

With respect to the rates and other overheads that LMS have, well that again is a problem that they have to deal with. Again, it is not cheating in any way to organise your trading process to minimise your cost.

I can see the problem is the same that the Luddites had, the introduction of factory weaving undermined the cottage weaving industry. Through out history there ar emany examples of industries and practises being swept away by changes in trading and technology.

I have sympathy with the LMS, needing to have reductions in rates, additional waste disposal charges, water charges (if they have a tap or not), entertainment licence if they dare to play a radio. Yet it is unlikely that the issues will be addressed across the board, other than to seek to penalise others, as retail outlets have been cash cows for local government, who are wedded to ever more spending. Yet do not see that domestic waste collection, or road maintenance and many other services that the general rate payer uses as their core services.

There is a lot wrong, yet I do not believe it is HK, the Inter-net traders, or computers in the work place, all of which have changed how things can be done.

[Dave Hopkin]

Erf - Regarding Rates... I was not suggesting any sort of cheating, just the inequity of the current rates system

The current system of differentiating between Retail Premises and Warehouse rates pre-dates significant levels of internet trading and is giving Internet traders a significant bonus - this will have a detrinmental effect of most areas of retail - if we want the option of going to an LMS (or indeed any High St shop) then the powers that be need to level the playing field

The warehouse rate should apply only to true (traditional) warehouses that only supply to retail/manufacturing outlets - Internet Trading warehouses that supply to end customers (me and you) should be paying something akin to retail premises business rates to keep our high st's alive and not just a place for fast food and payday loans companies

[Erfolg]

Dave

The trouble with playing fields and also history (as an another example) what is correct and perhaps fair, is all a question of perspective.

I am aware that some Local Authorities do not approve of retail trading out of warehouse type facilities. Some say they are concerned at the additional traffic generated etc. Yet, again, I go back to my youth, the coming of Tesco was opposed by our then local council, which at the time was packed with shop keepers and other self interested individuals. Their shops by and large closed as Tesco offered better value for money and higher quality than they provided.

On that basis, if a model shop can trade from a wrinkly tin shed on trading estate, to his and my own advantage, I have no problem with that. Parking could be much more convenient.

Through out my life to date, I have seen many changes, some only recognised on reflection, some for the better, some for the worse. Although i now recognise, like King Canute, no amount of commands by government and certainly by me will stop the changes which come with time. Many have tried, particularly by rigging the systems, most if not all fail, often the timing is unpredictable. I look at the EU and think the Hansa League and to a much lesser extent the Cinque ports.

[graham dewis]

Ordered 2 lipos from Hobby King items where delivered 24hrs later I call that good service.

[Steve T]

Er, I've lost the plot on this thread now....but at least I now know where the 'foaming' Lanc comes from, I was also interested after seizing the pics and article on Hucknall.

[Steve T]

Hmmm, just checked the Lanc out, you can't get spares and apparently it breaks props due to the fact it is rudderless and stalls badly on landing, I thought it was ridiculous price! But I will give HK their due, they publish the bad reviews, and there are more bad than good!

[ceejay]

well I succumbed and had a looksee on HK website to see what price a Futaba RX was.....£10 more than UK mail order and £5 dearer than my LMS

I wont be bothering

cj

[Steve T]

So they are not the messiahs, we were right, just naughty boys !

[Paul Marsh]

That lanc in the mag is mine, and it flies quite well really. All aircraft will stall, but I can come in quite slow and lands ok, Just don't follow thier CofG recommendation. They say as it's tail heavy put the battery in the tail to make it fly. Wrong! Chris and I put the battery forward on the center wing and both fly well. Sometimes it's the instructions let the product down and customer support when it goes wrong.

[Pete B]

Posted by ceejay on 30/01/2015 14:33:51:

well I succumbed and had a looksee on HK website to see what price a Futaba RX was.....£10 more than UK mail order and £5 dearer than my LMS

I wont be bothering

Just think of the howls of anguish if they were selling Fuby gear at cut-throat prices....

Their Hitec prices aren't competitive, either.

Pete

[Steve Hargreaves - Moderator]

Could it be that HK LIKE inflated prices on Futaba & other gear as it persuades people to buy HK stuff instead?

Oops I said that out loud didn't I?

[pete taylor]

"Nobody expects the Spanish Inquisition!..."

Not wishing to labour the point here, but has anyone else spotted the ongoing theme in the Invertrix quad review?? (Fab little quad btw!)

Six images in the review clearly show HOBBYKING nanotech batteries being used for the flying shots yet, spookily enough the sole photo illustrating the battery in close-up again avoids the exposure of the HK brand by swapping to a Dynamic Lipo....

By design....surely not????