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UK purchases of sample sets from EU suppliers from 1/1/2021

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IainStinson

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UK purchases of sample sets from EU suppliers from 1/1/2021

PostThu Dec 31, 2020 4:59 am

UK purchases from EU sample set suppliers now the UK is not in the EU

On January 1st 2021 the UK will have completely left the EU: the transition period will have come to an end and the new EU/UK trade arrangements will have come into play.

Does this mean that sample set purchases made from January 1st 2021 from an EU company should be treated the same way as a purchase from a non EU country? As far as I can tell software and sample sets are not covered by the EU/UK trade deal. Sample sets would be subject to UK import VAT and possible excise duty that would have to be paid by the purchaser to the UK government rather than being charged by the sample set supplier. (There are other rules for sales less than £135 in value…)

Is this correct?

Does anyone know the accurate position?

Iain
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dhm

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 11:26 am

I don't yet know the exact position, simply because I didn't see much point in getting prepared before we knew what the deal (if any) was going to be.

What I can say is that I will continue to represent OrganArt Media, Sonus Paradisi and Voxus Organs, so that UK customers can, if they wish, purchase those products through my online store (http://en.midi-organs.eu/index.php/shop ... ample-sets) with all-inclusive prices in GB£ - at least so far as downloads are concerned.
I'm guessing the situation would be different where physical media (DVD or USB sticks) was concerned, and I will take further advice on that.
Douglas Henn-Macrae
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http://www.midi-organs.eu / http://www.gundulf.org.uk
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srw647

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 5:34 pm

Does anyone suppose the UK government knows the right answer?

There are EU suppliers of physical goods who are currently refusing to supply them to UK consumers because the UK government demands that they register for UK tax. I guess we'll find out over the next few months whether we'll rely on UK resellers being willing to do the hard work for us or whether an easy way of buying virtual goods will be found.
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dhm

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 5:54 pm

Just to add to my previous post above, and to clarify:
If a UK customer buys an EU producer's sample-set from me, I give the customer a download link and an iLok activation code (provided to me by the producer).
The UK/EU agreement says trade will be tariff-free, so I'm assuming that means no import duty.
Therefore, provided there are no drastic changes to £/€ exchange rates, or UK VAT, there should be no major changes to UK prices.
Douglas Henn-Macrae
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http://www.midi-organs.eu / http://www.gundulf.org.uk
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burtonwurli

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostThu Dec 31, 2020 8:02 pm

There should be a change in all VAT rates. My understanding has always been that a percentage of VAT charged went into the EU coffers. If not then the UK governemnt will be pocketing it.
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JulianMoney-Kyrle

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostFri Jan 01, 2021 10:37 am

If a proportion of VAT charged in the UK on EU imports has been going to the EU, I doubt very much if it will now be returned to the customer. The Government is in so much debt at the moment as a result of the pandemic that I would imagine they would jump at the chance to collect additional revenue without the taxpayer noticing that anything was amiss. There is a long history of stealth taxes and confusing ways of calculating liability so that it isn't obvious just how much we are all paying in tax. For a while I was earning enough to reduce my tax-free allowance, which effectively meant that I was paying 60% income tax on part of my earnings, even though the top rate of tax was officially 45% and I wasn't earning enough to be liable for that. When I tried to explain this to people they mainly didn't believe me, essentially because the arithmetic required wasn't entirely straightforward.
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IainStinson

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Re: UK purchases of sample sets from EU suppliers from 1/1/

PostFri Jan 01, 2021 12:59 pm

From some “research” it would seem that where goods over £135 in value are purchased from outside the UK, including the EU, the purchaser will be charged import VAT and duty by the UK government on the item being imported. Usually the supplier does not charge sales tax (or VAT) on items they sell for export. The payment of the import VAT and duty is usually paid to an agent in the UK before the goods are delivered to the customer.
(When the UK was in the EU the supplier charged VAT (at the appropriate rate) at the point of sale and the customer got the goods without any further payment.)
(See https://www.gov.uk/guidance/vat-and-ove ... nuary-2021)
For goods worth less than £135, the supplier can register for UK VAT and charge the VAT at the time of purchase saving the purchaser from having to deal with import payments.
(You can see this in action if you try buying some items from a company such as thomann.de.)

Sample sets and other software which is delivered on physical medium are regarded as ‘goods’. However, sample sets and software supplied as a download only are considered as a ‘digital service’ and importing digital services is different to importing ‘goods’.

Again from my ‘research’, digital service suppliers would not be expected to charge VAT or sales tax on the downloads and the responsibilities for paying the import VAT and duty rests with the UK based consumer. The supplier can register for UK VAT and charge customers UK VAT on their purchase, absolving the purchaser from any other payment to the UK for importing the software / sample set. The supplier has to pay the VAT to the UK government. (See https://www.gov.uk/guidance/the-vat-rul ... ide-the-eu).

My expectation is that EU sample set suppliers offering download only purchase will treat UK purchasers in the same way as they treat other non-EU customers, giving us the responsibility of paying import VAT and duty.

UK companies selling sample sets made outside the UK can of course deal with these ‘complications’ for UK purchasers.

If you live in Northern Ireland part of the UK but within the EU single market still, well.....

Comments, corrections and new information welcome.

Iain

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