Buying mail order goods overseas? Beware!

Posted: 30th April 2013

In a case which highlights the pitfalls in buying goods from overseas by mail order, a man who received a cardigan in the post from Hong Kong as a present for his wife has failed to convince a tax tribunal that he should not have received unwelcome tax and import duty demands.

Plane on runwayThe man had returned from a business trip to Hong Kong with the cardigan, which was valued at £233.46, in his hand luggage but it was the wrong size for his wife and he returned it to Hong Kong by post. The retailer sent him back an identical cardigan in the correct size. The garment was intercepted by the UK Border Agency and was subjected to import duty and VAT totalling £80.30.

On appeal to the First-Tier Tribunal, the man argued that the cardigan should have been exempted from the charges on the basis that it was a modest gift and that it was already owned by him when it was imported.

He argued that it was ‘essentially a case of double jeopardy’ and that he had been unfairly penalised for importing the same item twice. It was also submitted that, given the unusual facts of the case and the modest sum involved, common sense demanded that the charges be waived.

The tribunal acknowledged that the garment that the man brought into the UK in his hand luggage was not subject to either VAT or import duty as its value fell below the £390 limit imposed by the Travellers’ Allowance Order 1994. However, substantially lower limits applied to goods imported by post from outside the European Union.

The exemption afforded to goods that are sent as a gift, valued at less than £40, from a private individual abroad to another in the UK also could not apply. Goods that are temporarily exported for repair may also be relieved from import duty, but that exemption had no application on the facts of the case.

Dismissing the man’s appeal, the tribunal concluded that he had imported two different items under two different tax regimes and that the second cardigan, albeit of an identical design to the first, was a new item of a different size. None of the exemptions cited by the man applied in the circumstances and the second cardigan properly attracted both VAT and import duty.

The Director of Border Revenue had instructed experienced counsel to defend the appeal and the tribunal noted that it had ‘considerable sympathy’ with the man’s view that dealing with the matter had ‘involved a disproportionate cost to the taxpayer when one looked at the amount of tax in dispute’.