Brexit - Used Guitars Sales and VAT ????

prowla

I think this stems from an article in the Grauniad which was written under the assumption of no-deal.

The deal is a free-trade one and you don't get double-taxed on goods from the EU.

andrewaward

I had a (bad) feeling this would be case. The U.K. has just became a lot less attractive to buy used music gear from , for our EU friends. And vice versa. 

guitars4you

andrewaward said:

I had a (bad) feeling this would be case. The U.K. has just became a lot less attractive to buy used music gear from , for our EU friends. And vice versa. 

What is annoying is that vat would have been collected when the guitar was first sold - Many guitars will out last our politicians who determine such rules - So a used guitar can now be sold many many times and each time a government can receive additional revenue on the same item

The used musical instrument trade operates under a 'margin scheme' for vat as per the used car/motor bike trade - I assume the same rules still apply to used cars and bikes amongst other goods - If so what impact does this have on the many nearly new cars from NI

exocet

guitars4you said:

andrewaward said:

I had a (bad) feeling this would be case. The U.K. has just became a lot less attractive to buy used music gear from , for our EU friends. And vice versa. 

What is annoying is that vat would have been collected when the guitar was first sold - Many guitars will out last our politicians who determine such rules - So a used guitar can now be sold many many times and each time a government can receive additional revenue on the same item

The used musical instrument trade operates under a 'margin scheme' for vat as per the used car/motor bike trade - I assume the same rules still apply to used cars and bikes amongst other goods - If so what impact does this have on the many nearly new cars from NI

Once outside of the Single Market it is a pure import / export situation. Whether goods are new or not, they have a value and theoretically can be moved across borders and sold. Before the Single Market, you had to declare goods at the border, expensive stuff had to have a carnet to ensure that you still had the goods when you left that territory. I once had to do this when I travelled with a van load of broadcast gear into France pre Single Market. The gear was all "second hand" but without a carnet - duty would have been payable. 
Thats where we are now.
I guess from the governments perspective, when does something become 2nd hand i e goods bought in EU and then brought back into UK. Without UK levying VAT on imports, they would lose revenue especially when some EU countries have lower rates of VAT than we do.

bgmartinsbridge

What's the view on impact on pricing? 

New
I guess most new Fender Gibson stock comes in from the USA to UK retailers? So no impact on supply price. 
But EU retailers will have to charge more, meaning UK retailer won't have as much competition so in theory could push up prices further? 

Used
Reduced supply from EU due to increased prices and therefore reduced demand. 
Reduced supply from UK into the EU due to the same. 
Supply and demand balance each other out? 

designerseye88

Looks like theirs going to be a lot of guitars moving between the UK and EU for ‘repair’ 

prowla

bgmartinsbridge said:

What's the view on impact on pricing? 

New
I guess most new Fender Gibson stock comes in from the USA to UK retailers? So no impact on supply price. 
But EU retailers will have to charge more, meaning UK retailer won't have as much competition so in theory could push up prices further? 

Used
Reduced supply from EU due to increased prices and therefore reduced demand. 
Reduced supply from UK into the EU due to the same. 
Supply and demand balance each other out? 

I don’t see the logic that EU retailers will have to charge more for new?

exocet

bgmartinsbridge said:

What's the view on impact on pricing? 

New
I guess most new Fender Gibson stock comes in from the USA to UK retailers? So no impact on supply price. 
But EU retailers will have to charge more, meaning UK retailer won't have as much competition so in theory could push up prices further? 

Used
Reduced supply from EU due to increased prices and therefore reduced demand. 
Reduced supply from UK into the EU due to the same. 
Supply and demand balance each other out? 

Why would EU retailer have to charge more? Goods from USA are more likely to enter Europe via shipping to Rotterdam (even goods described for UK as most have a European based distribution model) . Brexit changes nothing for that process?

They simply sell as normal adding VAT- in Germany it 19% which is one reason why Thomann can be cheaper than UK supplier.

The 2nd hand Market will be smaller because unless we're dealing rare goods, its not going to be worthwhile paying VAT either way for buyer in UK or in EU for a cross border sale.

I'd say that 2nd hand prices stay the same for most guitars unless there is a supply shortage of a specific model in UK market....but that's just a case of supply vs demand.

I can see some companies having to set up UK distribution e g Fractal Audio. Currently all EU sales covered by G66 but I get the feeling that they are a small outfit and won't want expense of registering for UK VAT for a relatively low volume of sales especially given the warranty liability / difficulty in returning goods for repair. So perhaps we get a Fractal Audio distributor - be interesting to see what price pont ends up as, would be surprised if it made product cheaper.

Gassage

bgmartinsbridge said:

What's the view on impact on pricing? 

New
I guess most new Fender Gibson stock comes in from the USA to UK retailers? So no impact on supply price. 
But EU retailers will have to charge more, meaning UK retailer won't have as much competition so in theory could push up prices further? 

Used
Reduced supply from EU due to increased prices and therefore reduced demand. 
Reduced supply from UK into the EU due to the same. 
Supply and demand balance each other out? 

Well, no. Because the UK is one 27th of the EU (or was). So the loss is roughly 27 times greater (obvs adjusted for populations etc) in terms of market sale potential.

fretmeister

https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021#:~:text=OMPs must register for UK,at the point of sale

Rob1742

I am currently not buying as I am totally confused, as are the suppliers. I buy quite a few clothes that come from the EU, it was up until now effortless.
Now I am not sure what the pricing actually is and how long it will take to get to me. 

Bottom line for me is I rarely purchased outside of the EU as you then have to pay charges before the items are released, which include quite high handling fees. If this is the case in the future for items from the EU it’s a massive issue for me as I would usually take in at least two parcels a month that they may well now lose out on.

There is much uncertainty from the suppliers as to what is happening, what an absolute crazy situation we have to now live with. On the guitar front my purchases this year have amounted to £8000, really enjoyed the service provided, but now we just don’t know how we are going to trade moving forward. 

WindmillGuitars

guitars4you said:

SteveRobinson said:

No, you have to declare that the goods are staying in NI or it's just like exporting directly to EU

bugger - I was going to open a huge Ikea style warehouse just for a 3rd party vat free distribution centre !!!!!!!!!!!!!!!!!!!

Trust me @guitars4you ;.. I've had a few brands we stock ask me about this! Lol Being based in NI apparently puts us in a strong position - but looking at the paperwork I've just had to do to ship four guitars today into EU it's nout but a pain in the ass! 

John_A

So Boris in telling us trade with the EU is tariff free isn’t actually true shock!  

Seziertisch

John_A said:

So Boris in telling us trade with the EU is tariff free isn’t actually true shock!  

It is tariff free. A tariff is an extra charge on imported goods to make them less competitive than domestic goods. 

Since Britain is no longer part of the EU, it can no longer benefit from the same freedom of movement for goods. Not having to pay tax on second hand goods imported from somewhere else in the EU was part of that freedom.

exocet

John_A said:

So Boris in telling us trade with the EU is tariff free isn’t actually true shock!  

The "tariff free" scenario really only applies to new manufactured goods or agricultural produce that is traded through officially recognised business channels. 

Fast forward 10 years, we may have a Free Trade Deal with US. Let's say that there is no US / EU trade deal so guitars imported from US into UK are 3% cheaper than into EU. The EU has an FTA with UK - what they wouldn't want to happen is the same product coming into EU via UK without the tariffs that would otherwise apply.