Saturday 8 June 2019

VAT refunds on imports

If your interest extends beyond modern stamps bought direct from Royal Mail or the Post
Office, and if you are in the UK and buy from outside the EU, you may have your package intercepted by Royal Mail and subjected to VAT on import, and Royal Mail's handling charge which is currently £8.

This doesn't only apply to stamps and other philatelic products of course, if you think you will save money by buying your iPhone from China or the USA you might be in for a shock!  But sticking to philatelic items, you may not have to pay as much as you think.

What follows is not tax advice and I cannot be liable for things not turning out as you might hope, but this relates what happened with a recent purchase of QE2 postal history from a dealer in the USA.

I was a little upset that this package was caught for Value Added Tax on import.  Not that it wasn't payable just that it had been caught, because not everything is, even if it's larger than a letter.

I wasn't sure that the VAT had been correctly calculated.  Unusually the US dealer had used a USPS postage form produced at the counter which incorporated a customs declaration - they don't usually use them at all.

The description of the contents was put simply as 'COVER' - I suspect that this was entered by the postal clerk who had asked the sender about the contents.

This of course tells UK Customs nothing; but the declared value of US$50 and postage of $24 was enough for the charge to be raised without examining the contents. I don't know whether they would have charged the same rate if the package had been opened.

VAT was charged at 20%. I looked at the HMRC website and decided that it ought to have been 5%, especially after phoning the VAT help-line. Rather than the usual call-centre type of operative, I had a chat with a chap who appeared to be of mature age, with plenty of experience and happy to chat the options and system through.

Short story long: I applied for a part refund and have received a letter to say that I shall be getting a refund of £9.61 - no, it's not that much, but it was worth the time and effort to establish a principle.

So this is the information at HMRC (my highlighting):

Goods from non-EU countries
If you import goods that you’ve bought from non-EU countries they’re normally charged at the same rate as if they had been supplied in the UK. But if you import works of art, antiques and collectors’ items they’re entitled to a reduced rate of VAT.

Valuation of imported goods
The value for VAT of imported goods is their customs value, determined by the rules in Notice 252, as well as incidental expenses - such as commission, packing, transport and insurance costs incurred up to the goods’ first destination in the UK ....... any Customs Duty or levy payable on importation into the UK any Excise Duty or other charges payable on importation into the UK - except the VAT itself.

Postage stamps and philatelic supplies (VAT Notice 701/8)

5. Philatelic collectors’ items
5.1 VAT liability
Philatelic collector’s items are liable to VAT at the standard rate, but the tax may not always be due on the full value.

5.2 Value for VAT of philatelic supplies treated as collector’s items
[This applies to VAT-registered dealers accounting for sales, so I have omitted it]

5.3 Imported collector’s items
Some items of philatelic interest are eligible for a reduced valuation at importation which gives an effective VAT rate of 5%. This figure is reached by calculating a value for duty using the appropriate duty method, adding any additional costs (see paragraph 3.1 of Imports (VAT Notice 702)) and multiplying the total by 25%. Applying the 20% rate to this value gives an effective VAT rate of 5%.

So the VAT rate itself is not lower, but the value of the goods for the purposes of calculating the VAT is reduced, producing the same result.

Form BOR286 is dowloaded from the Border Force website. This is a pdf which can be completed manually or on the computer. As you also need to send (original) evidence then you will need to print it anyway.

Supporting evidence is:
- Customs charge label stuck to the package
- Customs declaration form completed by the sender
- invoice/receipt - and, it says 'such as eBay page or PayPal receipt'.

To support the claim I also enclosed photocopies of some of the covers, which were shown on the invoice with thumbnail images.

NOTE: the VAT notice says only that SOME items of philatelic interest are eligible for a reduced valuation. I don't think there is a list or guidance as to what is included and what is excluded.

For instance, GB mint decimal stamps may not be due for any tax being valid for postage, but they MAY be treated differently.  So your experience may be different depending on what you are importing.

UPDATE: Another thought. IF - and only if - the sending is of sufficient value to require a customs form and therefore to attract the attention of Royal Mail's interceptors....

Contact the sender before your order is posted, ask them to endorse the Customs form
"Reduced rate per VAT Notice 701/8, Para 5.3".

That should ensure that you don't have to go through hoops to get the refund that I have today received.


  1. Royal Mail Parcel force charge £12 for each item of mail stopped for Customs. Australia Post, for example, use a service that rquires Parcel Force to deliver, even when a small envelope. I received an order from Australia Post last week sent with Parcel Force. The VAT was £2.36, Parcel Force charged £12 for this and the item had not even been opened. They seldom are. Why do Royal Mail letters charge £8 and Parcels £12 no matter what the size of item or value of charge? Feels a bit like a chance to make money out of us again, especially if no item is being opened. Of course our friends in the USA find all of this amazing as individuals aren't directly taxed or charged for mail.

  2. And how about items bought from the Royal Mail who adds VAT automatically and sent to me here in the US. Can I claim a refund?

    1. What items are you referring to?
      Stamps alone have no VAT.
      If you are referring to taxable albums etc, then they should be supplied VAT-free (zero-rated); I've had refunds before for goods sent direct to non-EU customers on my account.

  3. Same here in Italy, they charge 15 Euro for each item; last year I received an order from Australia Post split in two shipments and I had to pay 30 Euro plus 10% VAT. :-(


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