Dear Dan and team,
Today I received my very first order of acne.org treatment, it looks good and I can't wait to start the regimen! Anyway, back to the topic.
When tracking my order, I noticed that it was being held by Customs (the people who check imports), and so I was anxious to find out whether I had to pay extra to receive the delivery. Below, I will report my own personal experience and honest opinion, and elaborate on this using information I have since researched. Although there's quite a lot to read, I hope my writing is clear and understandable, and that it will be of some use!
I ordered the starter kit of 3 x 8 oz. bottles (cleanser, treatment, moisturiser) which came to $44.21. I decided to opt for the fastest shipping method, and so this was an additional $38.92. The total was then $83.13. With my bank's conversion rate and a charge of £1.36, the total came to £50.77. I have suffered from acne for 8 long years, with nothing working effectively and no end in sight. So, would I say this is expensive? Put simply, if it works significantly better than my current erythromycin, then no! If it doesn't work, then yes!
How UK Postage Works
In the UK, we have a public mail system called the Royal Mail (think post boxes, post offices etc.). They distribute letters and some parcels under the the name 'Royal Mail', and some other parcels under the name 'Parcelforce Worldwide'. We also have many (fully) private companies that deliver also.
When a piece of mail comes into the UK, Her Majestey's Revenue and Customs (HMRC) (the Queen's government's customs!) demands the duties and taxes be paid immediately. So, whoever wants to deliver the parcel has to pay these things, and then on delivery, they get the money back from the customer.
My Order and Price Comparison
Parcelforce Worldwide delivered my parcel and charged me £22.13, or about $37. They used the following breakdown:
Customs Duty: £0.00 (may only apply if value is greater than £135)
Excise Duty: £0.00 (for alcohol and tobacco)
Import VAT: £8.63 (standard 20% tax on (most) things sold in the UK)
Clearance Fee: £13.50 (Royal Mail/ Parcelforce's fee for handling - see later!).
So, my total cost is £72.90. For comparison, I get erythromycin from our national health service (NHS) and it costs me around £8 for a six-week prescription. Although I only take this, in the UK one can (AFAIK) get any combination of acne drugs for the same fixed ~£8, as long as they are prescribed and paid for together.
How UK Postage Works (continued)
I was told that if I want to find more information about the cost of international postage then I should search for 'Notice 143' on http://www.hmrc.gov.uk . So, I did just that:
Value Added Tax (VAT)
Here are what I have considered to be the important points about VAT:
- For items valued (i.e. the value stated on the packaging label) between £0.01 and £15 (inclusive), there is no customs duty or VAT!
- For items valued between £15.01 and £135 (inclusive), there is no customs duty, but there is VAT.
- VAT is a fixed and known percentage that can be predicted and told to the customer, at least in the UK.
- Alternatively, it may be possible for a company to pay UK VAT in advance and charge their customers the extra difference, thus avoiding potential surprises (see hmrc.gov.uk).
VAT and the Clearance Fee
This is where it gets really interesting! I quote from hmrc.gov.uk:
If customs charges are payable upon importation, Royal Mail will charge a handling fee to cover the costs for carrying out customs procedures, which includes paying any customs duties or VAT due and collecting it from you. If customs examination is required, or if information is missing from the declaration, Royal Mail open, repack and reseal the package. All international courier and postal operators charge fees for their services and HMRC and Border Force does not have any authority over the level of charges they apply.
(Note that if there is no duty and/or tax to pay, you won't be charged a handling fee)
To me, this seems to suggest that the clearance fee I paid was actually a kind of administration fee, for the hard work of the Post Office to calculate the VAT on my order! It seems that if the 'value' is £15 or less, they won't bother to calculate (and charge) VAT, and so there won't be any clearance fee either. Double win?
Possibly. Possibly not. They go on to say that the VAT is normally calculated on the declaration value (the value acne.org choose to write on the label) plus shipping costs! The value on my package's label was $34.02 (not the $44.21 above but OK) and the shipping was $38.92, which makes a combined $72.92. 20% of that amount is then added as VAT, which would be an extra fee of £8.68. This, I think is where Parcelforce get the VAT value above.
The cheapest UK delivery you do is $20.53, or £12.23 (according to Google). So, to avoid VAT and the clearance fee, you would have to say that the product is worth around £2 (or less) to get the total under £15. I don't know what the definition of 'declaration value' is so I may be wrong with the following, but within the UK it's often used as a kind of 'value that you are insuring for'. You'd have to look into what rules you have to abide by, if any, but this has the potential to save buyers in the UK a lot of money.
The European Union - An Alternative?
Alternatively, you could have a manufacturer based in the UK or the EU! Here is some information that is from hmrc.gov.uk that I think is potentially interesting:
For goods moving within the EU, import duties and taxes do not usually apply.
None-UK EU members are Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
Congratulations, you've made it to the end of this epic post. I hope it is interesting/useful!