I regularly receive emails & blog comments from people who have imported something from China – shipments that should have been declared through customs so that import duty and VAT are paid – but they arrive without any such charges.
This usually happens because Chinese suppliers UNDER-DECLARE the value of the goods sent to you. E.g. you bought something for £200 but the supplier marks the package as a GIFT and puts $20 as the value, which by law means there are no taxes to be paid.
For personal use this doesn’t create much problems BUT if you’re a business owner or sole trader, this is a big issue as you can’t properly book the transaction as you haven’t paid any taxes. And even if you do, if you get an audit from HMRC they will quickly find out that you haven’t paid taxes on these purchases which could lead to penalties.
If your goods are delivered via sea freight or air freight, then there usually won’t be any problems as the shipping company will by default process your shipment through customs.
Problems usually occur with courier companies and Royal Mail (airmail deliveries).
First, I will give some advice on what to do to PREVENT situations like these from happening:
1) Always, always ask your supplier to attach the REAL invoice with the REAL value listed on the outside of the package and to fill in any attached customs forms properly. In many cases this will help but it’s still quite common for Chinese suppliers to under-declare your shipment, even if you’ve asked them not to.
2) If your goods are being sent via courier (DHL, FedEx, UPS etc.) then once it’s been dispatched and you have the tracking information to hand, you should call the courier and inform them that this shipment requires customs clearance. They’ll usually give you the contact details for their customs department, who you can send the invoice and proof of payment to. This way, once the shipment arrives in the UK they’re already prepared and ready to do the proper customs clearance.
Now, let’s cover situations when you receive your goods without paying any taxes: [Read more…]