Wednesday 24 July 2013

Time For A Rant Pt 2

The Post Office Stage Coach (Henry Alken Snr)

Items imported into the UK are liable to taxation. Any goods imported from non-EU countries into the UK over the value of £15 are liable to import VAT (Value Added Tax - currently @ 20%). Gifts between private individuals over the value of £36 are also liable for VAT. Goods and gifts over these values may also be liable for customs duty but in general customs duty for goods up to the value of £135 is not levied. Although the charge labels on packages for which tax is due are identified as "Border Force" - HMRC (Her Majesty's Revenue and Customs) the tax is collected by the Royal Mail and must be paid before the package will be delivered. For each charge the Royal Mail include a "handling fee" of £8.

Whilst there is a discretionary excess of £9 for customs duty - e.g. any customs duty calculated as less than £9 is not usually levied - there is no such excess for VAT. This means that if your package is valued at £15.05 then VAT will be levied at 20% of £15.05.

Whilst I have no real issue with the levying of VAT I do have a problem with the Royal Mail £8 "handling fee". Leaving aside for a moment the questionable practice of levying a charge in order to collect a charge (e.g. HMRC levying an "administration charge" for processing your tax bill) the fee amount seems excessive and often exceeds the VAT being charged, resulting in a very high proportion of the value of the item. Let me give some examples:-

Item Value £15.40 - VAT @ £3.08 (20%) - Handling Fee £8 (52%)
Item Value £27.25 - VAT @ £5.45 (20%) - Handling Fee £8 (29%)
Item Value £3.22 - VAT @ £6.32 (196%) - Handling Fee £8 (248%)

In the first example the item value only exceeds the criteria for VAT being charged by 40p but the handling fee amounts to more than twice the VAT rate. And no, I'm not making the last one up. Some operative in the Royal Mail or HMRC valued this item at USD$49.50 even though on the customs declaration the decimal point was clearly between the '4' and '9' and there was no '0' after '5'. Of course these charges had to be paid before the item could be delivered and obtaining a refund required the completion of a form submitted with evidence - all at the customer's own expense.

Daylight Robbery

Since the receiving customer has paid for the item and usually the postage and since the tax charge notification is a matter between the Royal Mail and HMRC it seems curious as to why they think the customer should pay extra for the privilege of being required to pay the tax due. The "handling" is not something requested by the customer and is hardly a service provided for his or her benefit. It is a bit like a traffic warden adding a "handling fee" to a parking fine levied on behalf of the local council - a way to defray the cost of enforcement onto the ordinary citizen when his taxes, supposedly, already pay for the cost of that enforcement. In the case of post the cost of delivery has already been paid by the sender. The customs inspection is a government intervention facilitated by the Royal Mail and by the customs declaration completed by the sender. Why should the customer have to pay for that intervention on top of any tax due?


Bob Alford said...

You ask why Nick?

Because these mindless minions who have been promoted to their own level of incompetence have to do something in their mundane existence, and to make it as difficult as possible for the paying public is all part of their game.

And of course the politicians who approve these acts of idiocy are in ii for the photo or media opportunity - with their usual escape clause. "I was misquoted" or "not me your honor. I vas only followink orders...", they say.

And we really shouldn't mention corruption. Shh!

Bob Alford
Lampang Thailand

Anonymous said...

You have my wholehearted sympathy and agreement on this issue. If just the VAT was payable then I don't think that any of us would have any objection. However, the inflated fee charged by Royal Mail makes me think twice before ordering goods over the value of £15 from the likes of the Far East and North America.

A point I feel needs to be made, is that VAT is not chargeable on printed matter. However, I once made the mistake of ordering a combined shipment of books and kits from the Far East, and the sender did not make any distiction between the two on the Customs Declaration. Even though the kits themselves were valued at less than £15, the combined order was more than this so I was charged VAT and the Royal Mail's collection fee on the whole amount. Moral - always order your books separately, or make sure you instruct the seller carefully to fill in the Customs Declaration appropriately.

As a final comment, I did once hear a story (possibly apocryphal) about a lawyer who received notification from the Royal Mail that there was a parcel awaiting collection at the local Delivery Office, on which VAT and the Royal Mail's collection fee were due. He presented himself at the collection desk and threatened to sue the Royal Mail for unlawful obstruction of the legitimate delivery of his mail. They released his parcel without further question! Maybe there are some legal eagles out there that would be able to comment on this!


David M. Knights said...

Folks in the UK have my deep sympathy. We have lots of silliness here in the states, but at least we don't have VAT or a postal system that collects taxes--at least not yet.

fugaku said...

Canada Post has a similar policy. I haven't been victimized by it in some time but I'm sure it's still in place. Basically they have it set up so they can charge you a cover their admin cost of charging you a customs fee. However I will take that any day over UPS and FedEx, who charge enormous cross-border fees, often more than the value of the item in my experience. Don't even get me started on these "import charges" that are starting to appear on eBay auctions!!

Ronnie Olsthoorn said...

Good posts Nick, I feel your frustration. Everything and everyone seems to be out to empty your pockets these days. It really does make me angry.

Awhile ago I ordered a DVD from the US. Cost $19 + another $10 or so for shipping. My package didn't arrive though, instead I got a card asking me to report to the nearest Royal Mail Delivery Office (I was home by the way, the postman never rang the bell just stuffed the card in the mailbox!). Of course with the post being "out" I had to wait until the next day before I could pick it up. Sure enough I was charged something like £9, most of it the filthy handling charge. So far for buying DVDs in the US (even if it wasn't available in the UK or Europe for that matter)! Bah.

Straggler 脱走兵 said...

Hi Ronnie

Thanks! The postman used to collect any customs charge due at the door when he delivered the package - without a "handling fee". But this practice was stopped around 2005/6 and the notice cards were then delivered instead with the package retained at the post office for collection - or re-delivered if you paid the fees online.

It's no consolation to learn that other countries face the same "red tape and rip off" regimes. I have raised this with my MP and MEPs as well as sending a FOI request to the Royal Mail to understand the legislation they are using to ban the posting of paints. I'm still waiting for that one! If we accept these changes meekly and without protest the wedge will just get wider all the time.


Anonymous said...

I'm surprised that there is no organized effort by the mail order shops to lift this silly ban.