Online shoppers warned - 'Don't let parcels cost you a packet'

Date: 17 October 2005

Ref: NAT 39/05

With more people than ever before buying over the Internet, HM Revenue & Customs (HMRC) today warned of the extra costs that many online shoppers face from import duties and VAT on purchases that are delivered from abroad.

Customs Anti-Smuggling Manager Phil Colclough said:

"With a whole world of shopping opportunities now available, we want to help Internet shoppers avoid any confusion about what tax they need to pay. Many people often don't realise that they have to pay charges on purchases delivered from overseas. We don't want to put people off Internet shopping, where there are undoubtedly bargains to be found. However, we do want to make sure that online shoppers are quite clear about the full costs involved, and that there are no unpleasant surprises when the postman knocks at the door.

It is important that UK and foreign Internet companies can trade on a level playing field. Therefore tax on purchases needs to be applied fairly to all."

In recent years Customs officers have seen a dramatic rise in the number of packages on which Customs duty and import VAT is due. This reflects increasing levels of internet shopping - particularly from suppliers in the United States - and has led to complaints from the public, who are either unaware of the VAT and duty implications of internet purchases costing more than £18, or mistakenly assume that the £145 'passenger's allowance' applies.

People are often unaware that although the foreign sender may have completed the customs declaration form on the parcel, they are regarded as the importer of the goods. If anyone purchases goods over the Internet and the declaration is found to be false or misleading they may be liable to financial penalties or criminal prosecution. Furthermore the goods themselves will be liable to forfeiture.

If in doubt about potential purchases, or have any questions about customs charges individuals should contact our National Advice Service (NAS) on 0845 010 9000. Copies of our Notice Number 143 'A Guide For International Post Users' can be obtained from the NAS or from our website www.hmrc.gov.uk

Notes for editors

If you purchase goods over the internet you may be liable to pay Customs import duty and VAT when the goods enter the United Kingdom:

• Customs duty - if the amount of duty is £7 and over; and

• VAT - if the value of the goods is £18 and over.

These must be paid whether:

• you purchase the goods or receive them as a gift;

• the goods are new or used; or

• the goods are for your private use or for sale.

Charges are raised at the Customs Postal Depot where the goods are imported. The Customs charge levied will depend on the type of goods imported

Customs duty is not payable on goods bought from countries within the EU. However, VAT may be payable either in the EU country of purchase, or in the UK if the EU supplier is UK VAT registered. In addition, special rules apply to excise goods such as cigarettes, tobacco and alcohol.

The duty-free allowances for travellers arriving from outside the EU do not apply to postal importations and commercial goods may have other conditions applied, including the need for a full C88 Customs Import entry.

If you purchase goods over the internet and the declaration is found to be false or misleading you may be liable to financial penalties or criminal prosecution. Furthermore the goods themselves will be liable to forfeiture. It is in everyone's interests to ensure customs declarations are completed properly.

Number of charged parcels for the second quarter of the year (April - June)

Number of charged parcels @ Coventry International Hub parcels depot for financial years ending 31 March:

2002 213898

2003 269703 + 26%

2004 336657 + 24%

2005 434349 + 29%

Issued by HM Revenue & Customs Media Relations Team

Press enquiries only please contact:

Robin Campbell-Burt

Tel: 020 7147 2324

Out of hours

Tel: 07860 359544

Website www.hmrc.gov.uk

HMRC National Advice Service Tel: 0845 010 9000

Customs Confidential Hotline Tel: 0800 59 5000