Brexit - Used Guitars Sales and VAT ????

guitars4you

Can't find a clear answer to this - My accountant is closed over Christmas and not sure they will have any answer to this yet 

Currently, pre 31/12/20, then if you buy/sell a used guitar to any EU based country there is no vat payable - No difference if this sale is via a dealer, or a private sale, via Fretboard, e-bay etc etc etc - It appears as though any Brexit 'free trade no tariff deal' does not include such a deal on vat - As such I'm under the impression that if you buy a used guitar from say Germany (and I reiterate no difference if you buy this from a dealer or a private source) then the guitar will have vat added to the transaction when the courier delivers it to you

Likewise if you sell your guitar to a member of the public in Germany, they will have to pay vat when it arrives in Germany - As such UK prices will now be around 20% more expensive to any members of the public in the EU - As such the chances of you now selling a used item overseas, to any EU customer, will be far smaller 

Yet prior to Brexit, under what is called a margin scheme for appropriate dealers, then no vat was applicable on the sale of any used guitar 

guitars4you

Forgot - substitute 'guitar' for any musical instrument be it an amp, drum kit or flute

Sorry for any confusion, but I'm certain that if you sold a used guitar to a customer in say Norway or Switzerland, then they would always have had to pay vat on the goods when they arrive 

guitars4you

Note - any potential vat changes will not be applicable to any used guitars sold/purchased within the UK, be it via a dealer or a private sale - As no customs borders involved

Whitecat

Yep, VAT payable on all imports now, no minimum amount anymore either. 

Dealers/commercial sellers that sell into the UK from overseas are required to collect VAT at source from 1/1 and remit to her Majesty through the usual channels for items under £135. This can be done by their sales platform - ebay, amazon, reverb etc - but
if they have their own e-commerce they will have to
register for VAT and remit themselves. The consequence of this is that small outfits just won’t. Over £135 and it’s still payable at the border the old way via however a courier does it - over £390 and it attracts duty as well. 

And yeah, going the other way you would treat export to EU countries the same way you would treat a current sale to the US or Canada or Australia for example - so under margin scheme there is no deduction possible and the importer will have to pay at the border if that’s what their country/state/province requires.

Beyond the extra tax being paid there is also a subset of the population who just doesn’t like importing stuff if it’s hard. I’ve had things for sale on other forums that when potential buyers find out there will be extra charges/paperwork upon import they back out - they just can’t be arsed. 

Gassage

Hold on, surely you wouldn't pay the source country VAT?

andig

guitars4you said:

Forgot - substitute 'guitar' for any musical instrument be it an amp, drum kit or flute

Sorry for any confusion, but I'm certain that if you sold a used guitar to a customer in say Norway or Switzerland, then they would always have had to pay vat on the goods when they arrive 

I can confirm that here in Switzerland you have to pay VAT on arrival of goods. I imagine as we are outside the EU and that the UK struck a rollover deal some months ago this will not change anything.

guitars4you

Whitecat said:

Yep, VAT payable on all imports now, no minimum amount anymore either. 

Dealers/commercial sellers that sell into the UK from overseas are required to collect VAT at source from 1/1 and remit to her Majesty through the usual channels for items under £135. This can be done by their sales platform - ebay, amazon, reverb etc - but
if they have their own e-commerce they will have to
register for VAT and remit themselves. The consequence of this is that small outfits just won’t. Over £135 and it’s still payable at the border the old way via however a courier does it - over £390 and it attracts duty as well. 

And yeah, going the other way you would treat export to EU countries the same way you would treat a current sale to the US or Canada or Australia for example - so under margin scheme there is no deduction possible and the importer will have to pay at the border if that’s what their country/state/province requires.

Beyond the extra tax being paid there is also a subset of the population who just doesn’t like importing stuff if it’s hard. I’ve had things for sale on other forums that when potential buyers find out there will be extra charges/paperwork upon import they back out - they just can’t be arsed. 

Thanks - So effectively the margin scheme will no longer apply to used items, for any EU sale - And as you stated such sales will be the same as me selling a used guitar to Australia/USA etc - And no differential for new or used

In which case it will now limit the chances of any sale to/from the UK to EU as the goods will now be 20% more expensive due to vat - Obviously not applicable to any UK to UK sale 

guitars4you

andig said:

guitars4you said:

Forgot - substitute 'guitar' for any musical instrument be it an amp, drum kit or flute

Sorry for any confusion, but I'm certain that if you sold a used guitar to a customer in say Norway or Switzerland, then they would always have had to pay vat on the goods when they arrive 

I can confirm that here in Switzerland you have to pay VAT on arrival of goods. I imagine as we are outside the EU and that the UK struck a rollover deal some months ago this will not change anything.

I thought that was the case, even on a used guitar - Thanks

adamino

Good luck with this Brexit crisis.
Britain will now become a modern day Cuba.

Gassage

Again, surely if importing from EU, you lose the VAT from the source country and only pay the UK VAT?

guitars4you

Gassage said:

Again, surely if importing from EU, you lose the VAT from the source country and only pay the UK VAT?

correct - But I'm talking about the changes in vat to used guitars - Previously no vat was applicable on a used guitar - Be it purchased from a dealer or a private source - Be it from Germany, Spain, the UK or any EU country - Looks like now you'll have to pay 20% vat on the goods when they are delivered to your house, as though you were buying a used guitar from the USA 

Hence that £1000 Gibson that Pablo is selling in Spain will now cost you £1200 instead - And that Gibson you are selling for £1000 will cost Pablo £1200  - As such used guitar prices will be 20% more expensive if they cross borders - Hence most won't bother with such potential enquirers/sales

Jalapeno

Gassage said:

Again, surely if importing from EU, you lose the VAT from the source country and only pay the UK VAT?

Correct IMHO etc

webrthomson

Gassage said:

Again, surely if importing from EU, you lose the VAT from the source country and only pay the UK VAT?

Correct - it will work as per buying from the US (more or less) no VAT (sales tax) at source, but paid on import to the UK goverment (+ duty and import handling fees potentially).

Whitecat

guitars4you said:

Whitecat said:

Yep, VAT payable on all imports now, no minimum amount anymore either. 

Dealers/commercial sellers that sell into the UK from overseas are required to collect VAT at source from 1/1 and remit to her Majesty through the usual channels for items under £135. This can be done by their sales platform - ebay, amazon, reverb etc - but
if they have their own e-commerce they will have to
register for VAT and remit themselves. The consequence of this is that small outfits just won’t. Over £135 and it’s still payable at the border the old way via however a courier does it - over £390 and it attracts duty as well. 

And yeah, going the other way you would treat export to EU countries the same way you would treat a current sale to the US or Canada or Australia for example - so under margin scheme there is no deduction possible and the importer will have to pay at the border if that’s what their country/state/province requires.

Beyond the extra tax being paid there is also a subset of the population who just doesn’t like importing stuff if it’s hard. I’ve had things for sale on other forums that when potential buyers find out there will be extra charges/paperwork upon import they back out - they just can’t be arsed. 

Thanks - So effectively the margin scheme will no longer apply to used items, for any EU sale - And as you stated such sales will be the same as me selling a used guitar to Australia/USA etc - And no differential for new or used

In which case it will now limit the chances of any sale to/from the UK to EU as the goods will now be 20% more expensive due to vat - Obviously not applicable to any UK to UK sale 

Can you zero-rate margin scheme goods on export? 

fretfinder

But Mark you’re forgetting... we’ve taken back control!!! 

guitars4you

Whitecat said:

guitars4you said:

Whitecat said:

Yep, VAT payable on all imports now, no minimum amount anymore either. 

Dealers/commercial sellers that sell into the UK from overseas are required to collect VAT at source from 1/1 and remit to her Majesty through the usual channels for items under £135. This can be done by their sales platform - ebay, amazon, reverb etc - but
if they have their own e-commerce they will have to
register for VAT and remit themselves. The consequence of this is that small outfits just won’t. Over £135 and it’s still payable at the border the old way via however a courier does it - over £390 and it attracts duty as well. 

And yeah, going the other way you would treat export to EU countries the same way you would treat a current sale to the US or Canada or Australia for example - so under margin scheme there is no deduction possible and the importer will have to pay at the border if that’s what their country/state/province requires.

Beyond the extra tax being paid there is also a subset of the population who just doesn’t like importing stuff if it’s hard. I’ve had things for sale on other forums that when potential buyers find out there will be extra charges/paperwork upon import they back out - they just can’t be arsed. 

Thanks - So effectively the margin scheme will no longer apply to used items, for any EU sale - And as you stated such sales will be the same as me selling a used guitar to Australia/USA etc - And no differential for new or used

In which case it will now limit the chances of any sale to/from the UK to EU as the goods will now be 20% more expensive due to vat - Obviously not applicable to any UK to UK sale 

Can you zero-rate margin scheme goods on export? 

Not that I'm aware of - pre 31/12/20 then no vat could be reclaimed on a used guitar that I send to say Germany or USA - As you know, under the margin scheme the dealer paid the vat as part of his profit - So then the only difference was no 'import vat' on arrival in Germany, but was in the USA

So now, as an example - I buy a used LP for £1000 and list if for £1400 - I pay vat on the £400 so Boris gets £66.66 when sold - Now, this won't change as far as what I book out on my books, hence Boris still gets his cut - But the customer in Germany or Norway will pay appropriate vat, on arrival at his front door, based on the £1400 purchase price 

As such the only way to zero rate vat on a used guitar is to sell at cost - Previously no vat could be re-claimed under the margin scheme be it a UK customer, EU or USA

Whitecat

guitars4you said:

Whitecat said:

guitars4you said:

Whitecat said:

Yep, VAT payable on all imports now, no minimum amount anymore either. 

Dealers/commercial sellers that sell into the UK from overseas are required to collect VAT at source from 1/1 and remit to her Majesty through the usual channels for items under £135. This can be done by their sales platform - ebay, amazon, reverb etc - but
if they have their own e-commerce they will have to
register for VAT and remit themselves. The consequence of this is that small outfits just won’t. Over £135 and it’s still payable at the border the old way via however a courier does it - over £390 and it attracts duty as well. 

And yeah, going the other way you would treat export to EU countries the same way you would treat a current sale to the US or Canada or Australia for example - so under margin scheme there is no deduction possible and the importer will have to pay at the border if that’s what their country/state/province requires.

Beyond the extra tax being paid there is also a subset of the population who just doesn’t like importing stuff if it’s hard. I’ve had things for sale on other forums that when potential buyers find out there will be extra charges/paperwork upon import they back out - they just can’t be arsed. 

Thanks - So effectively the margin scheme will no longer apply to used items, for any EU sale - And as you stated such sales will be the same as me selling a used guitar to Australia/USA etc - And no differential for new or used

In which case it will now limit the chances of any sale to/from the UK to EU as the goods will now be 20% more expensive due to vat - Obviously not applicable to any UK to UK sale 

Can you zero-rate margin scheme goods on export? 

Not that I'm aware of - pre 31/12/20 then no vat could be reclaimed on a used guitar that I send to say Germany or USA - As you know, under the margin scheme the dealer paid the vat as part of his profit - So then the only difference was no 'import vat' on arrival in Germany, but was in the USA

So now, as an example - I buy a used LP for £1000 and list if for £1400 - I pay vat on the £400 so Boris gets £66.66 when sold - Now, this won't change as far as what I book out on my books, hence Boris still gets his cut - But the customer in Germany or Norway will pay appropriate vat, on arrival at his front door, based on the £1400 purchase price 

As such the only way to zero rate vat on a used guitar is to sell at cost - Previously no vat could be re-claimed under the margin scheme be it a UK customer, EU or USA

Been reading up a little over coffee and while this is probably slightly out of date, it implies that maybe you can zero-rate exports sold under the margin scheme - might be worth talking to your/an accountant... see 8.2. 

https://www.gov.uk/guidance/the-margin-and-global-accounting-scheme-vat-notice-718#section8

Formerly anything sent to the EU did not count as an “export” obvs so not possible to zero rate or allow VAT numbers etc - but come 1/1 perhaps it can be done. 

guitars4you

So a public awareness message to all FB members 

Bottom line is if you are buying a used item via FB, Facebook, Reverb etc etc etc and that item is in the EU, then you will be charged an additional 20% when it is delivered to you, in the UK - Makes no difference if you buy that used item from a private seller or a vat registered business - Ditto the EU buyer will be charged 20% on arrival of the goods at his front door - Hence the chances of any of us selling to a EU customer has somewhat diminished and few of us will be buying used gear from the EU

Won't effectively change anything on buying new goods from say Thomann - Only difference is where the vat is collected 

But used  gear has now just had a 20% price increase, once the goods go through a customs boundary 

Seziertisch

It will be more than 20% more expensive for a purchaser located in the EU purchasing from the UK. Most (if not all) EU countries charge VAT and duty on the postage costs as well as the cost of the item.

LPManic

@guitars4you If you are thinking of having a pre-Brexit sale for us EU members, please do it! 

exocet

guitars4you said:

So a public awareness message to all FB members 

Bottom line is if you are buying a used item via FB, Facebook, Reverb etc etc etc and that item is in the EU, then you will be charged an additional 20% when it is delivered to you, in the UK - Makes no difference if you buy that used item from a private seller or a vat registered business - Ditto the EU buyer will be charged 20% on arrival of the goods at his front door - Hence the chances of any of us selling to a EU customer has somewhat diminished and few of us will be buying used gear from the EU

Won't effectively change anything on buying new goods from say Thomann - Only difference is where the vat is collected 

But used  gear has now just had a 20% price increase, once the goods go through a customs boundary 

That was the conclusion that I came to albeit I wasn't looking at it from a business (trader) perspective.

By the sound of it - the UK authorities  aren't really ready for these changes. They've openly stated that imports to UK are quite likely to be given "soft treatment" in order to reduce impact of changes (mitigation against lorry queues - inbound to UK). Plus they don't have the systems in place to process the volume of transactions.....systems not ready...surprise surprise.

I suspect that many imports of 2nd hand gear will find their way through without the UK VAT element, certainly over next 6 months....the reverse however (export to EU) is less likely to be the same. 

I can see a lot of smuggling gear into and out of the country during our summer driving holidays to EU...