We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

There are taxes, and then there are taxes on taxes, and then….

I recently decided that I wanted to upgrade the CPU on my desktop computer. As it happened, the particular CPU I wanted was in short supply in the UK, and as prices here were substantially higher than in the US I decided to buy it from a shop in Seattle via ebay. It was quite possible that I would have to pay British VAT when the CPU was imported into the UK, but even after this I would still save substantial amounts of money.

So I ordered the CPU, and yesterday it arrived. I received a note in my mailbox telling me that some taxes were owing. Oddly, though, the taxes stated on the note came to about 26% of the price rather than the 17.5% VAT rate. I went to the depot, paid the taxes, and picked up the CPU. A sticker had been placed on the package, and this explained the discrepancy between the amount I calculated and the amount I was being charged. In addition to the VAT I was being charged a £8 “clearance fee”. You see, I was not just being charged taxes. I was being charged an additional amount to pay the tax collectors to charge me taxes.

Forgive me for being pissed off by this.

28 comments to There are taxes, and then there are taxes on taxes, and then….

  • Euan Gray

    Are you sure it wasn’t the freight company or import agents charging you the fee?

    EG

  • J

    I’ve run into this numerous times. I’m surprised you only had to pay VAT though, there are other import taxes that may apply. In my memory some of the things they will charge you extra for are:

    * Processing the taxes (as EG says this is a service you buy unwittingly from the shipping company (or its agents) not HMG)

    * Storing the item at an airport until tax is paid

    * Pretty much anything else they want

    It’s not easy to become a small time importer, I guess. Also, if you can get the shipper to be vague about the contents (or better yet the value) you can save a lot.

  • GCooper

    It’s even worse than it seems, Mr Jennings. When the thieves charge VAT, they even charge it on the postage, which, being postage, should incur no VAT.

    By the time Customs and Excise have finished, you’ll have ended up paying tax on the duty you paid.

    And then paying for it out of your highly taxed income, of course.

  • Rich

    Did the £8.00 include VAT or did you by any chance have to pay tax on the charge payable to pay tax.

  • I would think that was customs clearance.
    Not surprising as you were importing from outside the EU.

    What really surprises me (professionally) is the amount of customs work required for movements within the EU- and we’re supposed to have free trade!

  • harry Payne

    Welcome to the wonderful world of free enterprise where private companies will happily extract tax on behalf of government for a fat fee (that they set) and on which you are charged even more tax.

    Last time I ordered some stuff from Japan it arrived in one big box, with three smaller boxes inside. The freight company (not ParcelFarce, one of the big American ones) charged me triple the processing fee as it had to open each one…

  • Bernie

    Please excuse the length and the “I can top that” nature of this comment but I think several of you may find it interesting. It comes from a post I made to a pipe smokers’ newsgroup a few years ago;

    I have been looking at importing some US tobaccos into the UK for re-sale to
    other pipe smokers. I wasn’t looking to make a fortune at it. It would be a
    hobby business. As part of the feasibility study I wrote to the UK Customs &
    Excise in order to find out how to do it legally and to find out the costs.
    I had a reply that gave some formulae but was a bit confusing so I wrote
    back asking how they would be applied using actual figures. The following is
    the reply.

    5 September 2002

    Dear Sir

    IMPORTATION OF PIPE SMOKING TOBACCO

    Thank you for your e-mailed letter dated 31 August 2002 in respect of the
    above.

    Please note that a typical importation of 2 kilograms of pipe smoking
    tobacco would attract the following rates of duty and VAT.

    The rate of exchange for September 2002 is £1 = $1.5311.

    Therefore, if the Cost of the goods is equal to US $80 plus $30 shipping
    ($110.00 total): –

    CUSTOMS DUTY

    CIF = US $110.00

    110.00 = £ 71.84
    1.5311

    £ 71.84 x 74.9% = £ 53.80* customs duty

    EXCISE DUTY

    2 Kg x £60.34 = £120.68* excise duty

    VALUE ADDED TAX

    CIF 71.84
    CUSTOMS DUTY 53.80
    EXCISE DUTY 120.68
    TOTAL 246.32

    £ 246.32 x 17.5% = 43.10* VAT

    * Amount payable to Customs and Excise

    CUSTOMS DUTY 53.80
    EXCISE DUTY 120.68
    VALUE ADDED TAX 43.10

    TOTAL PAYABLE 217.58

    Should you require any further assistance in this matter please do not
    hesitate to contact me.

    Yours faithfully

    (name removed)
    OFFICER OF CUSTOMS AND EXCISE

    So we have an initial cost of $110 and after the above contributions of
    $337.84 have been added the cost is $447.84. Do you have an opinion on this?
    Would you like to express it?

    The example uses bulk bags not tins. Tins work out at considerably more and
    at the price they would have to sell for it is completely unreal to expect
    many people to be willing to buy it. So this does not look viable to me at
    the moment.

    I have not yet written a response to the Customs Officer and was wondering
    if any of you would care to help me out by suggesting a comment I might want
    to make to him :)

  • GCooper

    Bernie writes:

    “I have not yet written a response to the Customs Officer and was wondering if any of you would care to help me out by suggesting a comment I might want to make to him :)”

    Whatever you wrote to the bastard would be a waste of ink. Customs and Excise seems to operate quite regardless of the law and without any fear of retribution.

    This was proved beyond doubt when C&E were shown to have been illegally siezing the cars of people returning to the UK with products quite within permitted EU limits. Similarly, C&E’s actions in numerous trials have been under the magnifying glass for all manner of reasons.

    Nothing, of course, is ever done – either to individual criminals (I’m sorry, I think I meant to write ‘officers’) or their masters. It is simply too convenient a scam for government to inhibit.

    Smuggling shouldn’t be seen as a crime – more a duty (in the proper sense of the word).

  • Verity

    GCooper – perhaps I should revise my views on Cherie Blair.

    Bernie, you are asking for suggestions for a reply to a letter that you received in September 2002?

  • Bernie

    Verity yes I’m still speachless:-)

  • j.pickens

    Its funny.
    In the US, its the Democrats I know who are most likely to be avoiding taxes on income and sales. How do I know this? They tell me about it. They like high taxes to support their socialist programs, they just think someone else should pay for them.

    As to the UK, you keep electing socialists, high taxes is what you will get.

  • rosignol

    Do you have an opinion on this?

    I used to think “there must me more to the story, my ancestors couldn’t have revolted just on account of taxation….”

  • jmc

    Actually you got off very easily.

    In my experience customs can charge you anything they want. I have not dealt with HM Customs recently but I have with U.S, Rep of Ireland and France. A 20% surcharge is actually very reasonable.

    The worst are, of course, the French. I bought a region free DVD player in the US for a friend in France as a present. I made the mistake of having it sent direct from the retailer rather than having it sent to me and then for me to repack it and send it to France. Result, my friend had to pay more than 50 euro tax on a DVD player worth 60 euros. When it was pointed out to the French customs that the player was only worth 60 euro, an dnot purchased by the reciever, and had the invoice to prove it, and was obviously a present, they just shrugged and mumbled that they could asses any value they wanted, and whether it was a present of not.

    Moral. Never ever fill out a customs declaration truthfully regarding contents and value.

  • gravid

    They tried to sting me with an £8 charge from Amazon in the US. I told the postman i would not be paying and to send the parcel back. I then cancelled the order and reordered. the next parcel got through no problem . Result.

  • jmc

    “Moral. Never ever fill out a customs declaration truthfully regarding contents and value.”

    And before you can click your fingers and intone the magic words “laffer curve”, some one will be explaining how we all need higher taxes….

  • Paul

    UPS once charged me £10-00 for collecting taxes on an US import.

    It was the one and only time I have ever used them.

  • Baksheesh.

    Sounds a bit like one of those stories you hear of corrupt third world officials requiring an extra thousand quid before they’ll let the aid convey over the border.

  • guy herbert

    A client of mine used frequently to get free software and kit sent from Microsoft HQ in Redmond, and always ended up paying an import tarrif, courier customs handling fees and VAT on top of everything. Sometimes free stuff could work out very expensive.

  • Standard stuff. Net landed is the important phrase. Cost plus shipping plus duty plus clearance then pay VAT on that.

    Just the way the whole system operates and always has.

  • J makes a somewhat understated point:

    It’s not easy to become a small time importer, I guess.

    I wonder what the opportunity cost of all this tax and bureaucracy is. I often complain that the main reason I’m a corporate lackey and not a self-made millionaire is that my skills are not suited to dealing with all the government imposed nonsense that goes along with running a business.

  • Bernie

    I wonder what the opportunity cost of all this tax and bureaucracy is.

    Now there’s a question.

  • rsole

    But doesn’t it make you wonder – that after buying the item States-side, paying courier, customs , excise, and tax-gathering fee, plus VAT on the whole lot .. that you’re STILL paying less than you would in any high street in Rip-Off Britain.

    Makes you think ..

  • Zimon

    What processor did you get? Just so I can critique your upgrade path (hope you’ve not been chucking money at a DDR Rig).

  • “They like high taxes to support their socialist programs, they just think someone else should pay for them.”

    I think that’s normal. No one rational wants to pay higher taxes.

    The real weirdos (and I know a few), are those that advocate the programs then revel in paying higher taxes.

  • toolkien

    Its funny.
    In the US, its the Democrats I know who are most likely to be avoiding taxes on income and sales. How do I know this? They tell me about it. They like high taxes to support their socialist programs, they just think someone else should pay for them.

    As to the UK, you keep electing socialists, high taxes is what you will get.

    Am I to assume that you vote Republican? And nary a Republican acquaintance shirks paying their taxes either? And would these be the same Republicans who passed an $11 trillion increase in the accrual basis debt with a stroke of the pen (and a Republican congress who didn’t stand in the way of a Republican President).

    But even if you don’t, I can counterbalance and say that it is Republican portion my acquaintances who are more likely to wriggle out of taxes. Of course it has a certain consistency with outlook since most have no problem with massive debt. It’s all illusion anyway.

    Perhaps here in the US we should stop electing Democrats AND Republicans and operate under the illusion that we’re not electing socialists. When I pay roughly half my income on my labor in taxes and have a prorated share of $45 trillion of debt, I begin to think I live in a socialist construct as well.

  • Zimon: I suspect you won’t be impressed – I am pushing an outdated platform about as far as it can go. I was replacing the Athlon 64 3000+ on my Socket 754 motherboard with a 3700+, which is the fastest (desktop) CPU available for that platform. (The machine otherwise has 1.5Gb of RAM and a GeForce 6600GT 256Mb graphcis card). FWIW, I am not a gamer – I use the machine for media applications. The reason for the upgrade is that I have just bought a new 24 inch Dell display to go with the Sony 19 inch display I had already, and I want to be able to run two computationally intensive media apps at once, and also I want to be able to decode H.264 video at 1080p. I can just about do that with the new CPU (although the computer can’t do much else at the same time). It should be fine when nVidia release their promised drivers for H.264 acceleration on the graphics card, however.

    The plan is to go for another couple of years without major upgrades, skip socket 939 entirely, and then go straight to socket M2, dual core, and PCI express. We will see how long I can resist, however.

    And if anyone would like to buy a second hand Athlon 64 3000+ (socket 754), I have one for sale.

  • Winzeler

    Thank you tookien, for saving me some typing. Been a while, eh?

  • Zimon

    Michael I am impressed! That’s the way to plan system growth! Buy into a new platform at the low/mid range point, Then upgrade to best available when prices decline. You get your monies worth out of the Mobo and RAM and when you move to M2, DDR2 will be cheap as chips.