Just bought someone a present from Israel and it arrived without a hitch.
Now I've received an invoice from Federal Express for VAT on my purchase.
What's going on?
Is that legal?
Do I need to pay the tax, since I would have paid sales tax on the sale in Israel?
VAT on gift bought from Isreal
In simple terms yes, it is legal - in principle VAT and in some cases customs duty is due when you import goods from outside the EC. Fedex and the Post Office and other delivery companies collect such taxes on behalf of HMRC. But there are some reliefs that may apply, as explained below.
First what was the item, eg a book, CD etc? In principle if it is something that would bear VAT in the UK then import VAT has to be paid. Books and other printed material are zero-rated so VAT shouldn't be charged, but commercial CDs are liable to VAT.
Second what is the value of the gift and the VAT? The fact that sales tax would have been paid on the sale in Israel makes no difference unfortunately. You may find that FedEx don't chase you for the payment if the amount of VAT is minimal, so let me know details of the value etc so I know what we're looking at. If the value of the item is £18 or less, then VAT isn't chargeable. Hence the reason that many retailers of CDs, DVDs etc set up overseas companies to sell such items to UK purchasers so that they don't have to pay UK on the sale of such items.
VAT Notice 702: Imports contains this information - see secions 2.2 and 2.3 in particular.
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