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Where Taxpayers and Advisers Meet

Import Duties on Competition Prize

Mikethebook
Posts: 27
Joined: Wed Aug 06, 2008 4:09 pm

Import Duties on Competition Prize

Postby Mikethebook » Tue Jul 09, 2019 2:37 pm

If prize of a competition based in the USA, valued at £1,500, is shipped to the winner in the UK, would he/she have to pay any import duty or VAT, please?

Trevor S
Posts: 27
Joined: Tue Jan 01, 2019 12:37 am

Re: Import Duties on Competition Prize

Postby Trevor S » Wed Jul 10, 2019 5:57 pm

See HMRC notice 252 (link below), in particular sections 12, 4 and 24. It appears that duty/VAT would be due, as free of charge goods are valued at the usual value of identical goods, rather than the (nil) price paid.

https://www.gov.uk/government/publications/notice-252-valuation-of-imported-goods-for-customs-purposes-vat-and-trade-statistics/notice-252-valuation-of-imported-goods-for-customs-purposes-vat-and-trade-statistics#valuing-free-of-charge-goods

robbob
Posts: 2781
Joined: Wed Aug 06, 2008 4:01 pm

Re: Import Duties on Competition Prize

Postby robbob » Thu Jul 11, 2019 8:16 am

Ah the days of dial up internet - yahoo towers (fortnite of its day i kid you not) and chatting to bods in san fransisco - just so happens one of those bods mentioned they have a monthly palm pilot competition at their work each month and not many bods entered. I entered - won the first month (honest guv i was told it wasnt a fix) - and ended up having to stump a wad of cash to get my freebie - sigh. i did manage to program it to do tax comps though but did get bored of it after like 7 days.

Trevor S
Posts: 27
Joined: Tue Jan 01, 2019 12:37 am

Re: Import Duties on Competition Prize

Postby Trevor S » Thu Jul 11, 2019 10:50 pm

Purely out of curiosity ... any thoughts on what the position would be if the scenario was reversed - i.e. a competition run by UK company, with a winner outside the EU?

Normal business gift rules would permit input VAT recovery on the purchase of the prize, but require an equal output VAT declaration when the prize is given away. If that still applied in this scenario, and the foreign winner was also required to pay their equivalent of import VAT on arrival, the goods would effectively have been taxed twice. Whereas if the goods had actually been sold to a foreign customer, the UK business could have zero rated the sale, and the goods would only have been taxed once (in the customer's country).

On the other hand, if the UK company was allowed to zero rate the free supply of the prize to the foreign winner, it would be in the UK company's interest for the winner to be based abroad, as they would save the VAT cost!

Perhaps this is why competition terms and conditions often limit them to residents of the promoter's country!


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