8mm Forum: VAT tax in the UK?

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Posted by Osi Osgood (Member # 424) on November 29, 2008, 10:15 AM:

The first I ever heard of "vat" tax, was from Derann years ago, and I believe it means "value added tax", (which makes no sense to me!)

My question is, from what I have heard, all sellers have a value added tax on their items in the UK, but only Derann seems to take any off their prices for outside of the UK buyers, (it's currently at 15 percent off).

Is this only up to the UK seller if they wish to do as Derann does?

Do some sellers take that into account when they list their items in the first place?

I ask the UK seller to state as to why or why not they offer a VAT tax reduction for outside of the UK buyers.

I wouldn't be surprised if one of the reasons that Derann moves so much used film merchenise is partially due to thier VAT tax reduction (off they're already fairly low prices).

Granted, Derann does have more options than the seller who doesn't have new prints and other forms of video sales as well, which may allow them to have lower prices as a general rule.

Posted by Chip Gelmini (Member # 44) on November 29, 2008, 10:25 AM:

It should apply only to brand new products only. I am not sure if I understand this correctly though. So anything you buy that is 2nd hand, should always be VAT free.

Still, I could be wrong.

Posted by Osi Osgood (Member # 424) on November 29, 2008, 10:34 AM:

Hey Chip, thanks for weighing in.

No used stock also has the VAT tax on it, but they take that off for out of the UK buyers. I must admit, it has helped make purchases a little easier, especially a few months ago when the dollar was 2.15 to every British pound, (it is now 1.50 to every British pound, and yet Derann still has the 15 percent off, making the used list even more affordable.).

I don't understand why some offer the discount and some don't, which is the reason for this post. I'm hoping some of the other sellers will weigh in with their opinions.

Posted by Maurice Leakey (Member # 916) on November 29, 2008, 10:53 AM:

Every sale item (new or used), or service, in the UK has Value Added Tax @ 17.5%. The only exception is if the trader has an annual turn-over below a certain figure of UK pounds.

There are a few exceptions, such as food, books and childrens' clothes. In an attempt to get the UK economy moving, as from Monday 1st December 2008 the VAT will be reduced to 15%. This will last until the 31st December 2009.

Some firms offer sales VAT free for purchasers outside of the European Union, of which the UK is a member, although we still do not trade in Euro currency.

In the case of films which we buy, whether new or used, it is probable that some UK dealers whom we use do not pay VAT. In the case of Derann it is possible that they do, hence sales to the USA can be offered as "VAT free" and the appropriate reduction offered.

I used the word "services" earlier, this is also applied to the postage fee.

Posted by Mike Peckham (Member # 16) on November 29, 2008, 11:00 AM:

Maurice, spot on, and of course it is worth mentioning that not all businesses are VAT registered, I think that whether they are or not depends on their annual turnover. Derann is a big company, they will certainly be VAT registered, which is why they can offer to sell product VAT free outside of the European Union.

Mike

Posted by Martin Jones (Member # 1163) on November 29, 2008, 11:15 AM:

VAT is similar to the Sales Tax imposed in some US states. Strictly speaking, a UK seller should not charge VAT on sales to consumers outside the UK. If the consumer is elsewhere in the EU, he should then pay VAT on the goods AT THE VAT RATE FOR HIS COUNTRY OF DOMICILE as the goods enter that country. Likewise, goods purchased by a UK resident will attract the UK VAT rate on importation into the UK from anywhere else in the world, so the originating seller should not charge the local Sales Tax (VAT in the EU) when exporting.
Within the EU, only goods of significant value are usually sold "VAT free" when being exported; VAT will not be charged by the country of import on small value items as long as it can be shown that UK VAT has been paid.

Martin

Posted by Osi Osgood (Member # 424) on November 29, 2008, 02:39 PM:

Thanks for the feedback thus far on this series of posts. I have a much better understanding of the subject. So the reason why you never hear of a VAT reduction from other established sellers is because they don't have a high enough profit margin to warrant the VAT tax, just to make it clear, (as Derann IS probably, apart from
perhaps CHC, thee biggest Super supplier/marketer.)

Posted by Maurice Leakey (Member # 916) on November 29, 2008, 02:55 PM:

Osi

It's not profit margin, VAT registration for a seller is based on his annual turnover.

But don't ask me what the figure is, but I am sure someone will know.

Posted by Steven J Kirk (Member # 1135) on November 29, 2008, 06:43 PM:

When I was on holiday in Seattle in early 2001 I was constantly confused by how my change never seemed right when I bought anything. Yes there's a sales tax, I think it was 8 and a half percent, the problem was it wasn't ever quoted in the sticker price. It was added at the till. So you were forever buying something at $7.99 say but never getting the one cent change. The big difference in the UK is that VAT is nearly always 'in' the price so you don't notice with most things.

Posted by David Kilderry (Member # 549) on November 29, 2008, 08:52 PM:

I buy from Derann and they take off the VAT, but of course we get hit with extra postage. I still find Derann's prices very reasonable, the films are always well packed and sent promptly.

Here is Australia we have the GST (Goods and Services Tax). It is 10% and like the UK is included in the price of items, not added on. On my visits to the US I was constantly caught out, I'd have the correct amount ready and bang up goes the price so back into the wallet. It seems strange it is not included in the sticker price.

Is state tax included in cinema tickets in the US, as the posted price is the price you pay?

Posted by Jim Carlile (Member # 812) on November 30, 2008, 01:20 AM:

Yes, my understanding has always been that VAT does not apply to foreign orders, at least American, and even Americans within Britain were exempt from the VAT. But I also thought that all retailers charged VAT, regardless of their size-- it would be an interesting loophole if not. Books used to be exempt-- are they still?

In the U.S., sales tax is determined by state, sometimes also by counties surcharging a little extra for their needs. In most states there is no sales tax on movie tickets (California for one) although there is a sales tax on video rentals-- figure it out.

Almost all products, but not services, have sales tax, with the exception of food or food-to-go (which is always violated by fast-food places). Magazines and newspapers didn't use to, but now they do-- same with candy.

For internet and mail orders, sales tax is only charged to residents within the same state as the seller, or where the seller has a 'presence.' That's why Amazon is sales-tax free in most areas, but Barnes and Noble isn't. Every once in awhile, some state will try to set up in office in, say, New York, to track orders, and there's usually some lawsuit to end the practice. California routinely would go after out-of-state orders on the grounds that residents were purchasing elsewhere "in-lieu" of California, but except for cars, they don't do that any more. If you buy a car in Vegas to get out of sale tax, they make it difficult to bring it in.

Some merchants will try to impose sales tax on all mail orders, no matter from where, but they are not supposed to unless they have a presence in the state of origin. So watch out for this.

In the U.S., yes, sales tax is applied at the time of purchase and is never included in the purchase price. Ever. The mentality in the U.S. is to not include sales tax within the price of anything. Not only would it be difficult to keep track of accounting-wise, but in America, merchants would view that as paying the tax themselves and losing 8.5% profit or whatever!

So the rough rule is-- if you are out-of-state or out of country, don't let anyone charge you sales tax, and in the U.S, it's always a surcharge.

Posted by John Clancy (Member # 49) on November 30, 2008, 03:10 AM:

I believe the annual turnover has to exceed £60k to be VAT registered.

VAT will be going back to 17.5% in 2010 and then set to increase from 2011.

Posted by Stewart McSporran (Member # 128) on November 30, 2008, 10:48 AM:

Having had to VAT register my business last year I can go into screeds of detail; but essentially all the above is close enough.

The tricky one is on second hand goods that are bought from non vat registered sources, i.e. antique dealers buying from the public. I think in this case the vat is charegable on the profit, but I'm not 100% sure, so I keep my film collecting well away from my company activities!

The most annoying situation I find is when I buy prints from the USA and the seller marks up the value of the film so that the insured amount is maximised. All done with the best of intent, but it does mean that the revenue charge me VAT on the declared amount, not what I actually paid for it. Yes, you can get the difference back, eventually, but in those cases where it's made the difference between the revenue letting it through at no cost or having to pay some then there's still the Post Office's £8 handling fee to pay - which you don't get back, ever.

Posted by Winbert Hutahaean (Member # 58) on December 01, 2008, 04:36 AM:

I understand that within the European Union there is an agreement of refund tax at the airport on the day we are leaving. The scheme is to refund all VAT or sales taxes paid by visitors (not EU citizens)

In the case, eg. I (or Osi) visited Derann and purchased many movies at value more than GBP 400 (VAT included), can this (the 15% VAT) also be refunded ?

Please your advise,

Posted by Maurice Leakey (Member # 916) on December 01, 2008, 05:20 AM:

Winbert

You can obtain all the necessary information from the H.M. Revenue & Customs' website under "VAT for temporary visitors to the UK."

Basically you cannot be a EU citizen, and also you need to use a retailer who operates the "VAT Retail Export Scheme" and they will give you a form VAT 407. You will also have to agree with the retailer on how you want your refund made.

You show the form to British Customs at your departure aiport together with your purchased goods.

The refund will be made in the way which you previously agreed with the Retailer.

Posted by Winbert Hutahaean (Member # 58) on December 01, 2008, 05:33 AM:

Thanks Maurice, and indeed, since Derann is a VAT registered company than it is a great possibility we (as a non EU Citizen) can get our tax refunded.

Osi and David, once you make a visit to the UK, remember about this, while you do not pay extra postage, you will also get the tax refund!!

Hopefully, someone from Derann can explain that here...

regards,

Posted by Adrian Simmonds (Member # 581) on December 01, 2008, 06:14 AM:

this is the link for HM customs that deals with this:

http://www.hmrc.gov.uk/vat/consumers-visitors.htm

Kind regards

Adrian

Posted by Winbert Hutahaean (Member # 58) on December 01, 2008, 06:57 AM:

Thanks Adrian for the link. I quote something important from that URL:

quote:
First, you need to choose a shop that operates the VAT Retail Export Scheme. It's a voluntary scheme and not all shops operate it, so you need to check before you buy anything.

To obtain your VAT refund, you need one of the following documents the shop will give you this:

* a VAT 407 form
* a shop or refund company's own version of form VAT 407
* a VAT Retail Export Scheme sales invoice

And since you are from Derann, can you explain if Derann "operates the VAT Retail Export Scheme"? And secondly, do you have form VAT 407 readily available in the shop?

thanksm

Posted by Osi Osgood (Member # 424) on December 01, 2008, 10:28 AM:

"retail export SCHEME" sounds bad, just the scheme part, and I know it's not meant to be considered a scheme, it was just something that caught my eye.

I, as well as so many other foreign soil super 8 buyers highly appreciate Derann's VAT tax reduction. I kn ow it has made the difference as to whether I have bought or not bought many times in the past.

Cheers Derann!

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