UK export purchase - VAT refund charges

[Expatbob]

Hi,

I live in China where import duty is 40%, so puts the price of a new SubC at GBP equivalent of c.£5,769 (USD 9,256, HKD 72,155) - all at today's spot rates, rather than tourist rates, so likely a bit more.

Notwithstandng one should technically declare it where I to bring it back into China, it clearly makes sense to either pop down to Hong Kong where RRP is HKD 56,800 (no sales tax, GBP equivalent 4,541), or buy back in UK where RRP is GBP 4,950, and then claim back the sales tax (20%, GBP equivalent 4,125).

On paper therefore, UK is marginally cheaper, ignoring additional cost of flight to HK, FX charges and potential for negotiating a discount.

However, from what I've read, to be able to claim back VAT, the retailer has to be registered for the VAT refund scheme - major department stores in London are, but not sure about smaller ADs. Also, I've read that as a "cost" of adminstering the scheme, retailers deduct an admin charge - in some cases up to 5%!!! Therefore, the difference starts to get merge!

Does anyone know which ADs in London participate in VAT refund scheme, and what their charges are? The list of London dealers I've identified is:

- Selfridges / Harrods

- Goldsmiths
- Mapin & Webb
- Watches of Switzerland
- Ersnt Jones
- Wempe

Obviously, you can also buy duty free (and get the full 20% discount on sales tax) at Heathrow, but you'd be extremely lucky to find one there, and by that point, it's a bit late as you're leaving the country!

Grateful for any comments on experience of purchasing in this way..

ps - whilst i don't technically condone not paying duty, the fact that china chages 40% means that *no-one* in China buys in any luxury branded store - they are just giant showrooms for people to then go down to Hong Kong! Obviously any saving disappears, mind, if I get stopped at customs on the way back in!!

[esm]

the ADs you mentioned about are registered for VAT. the VAT is 20% atm, and you'd get back about 13 - 15% depends on the AD and the total amount you spent with them (the more you spend = more VAT refund).

it is unlikely to find a Sub C at Heathrow these days, unless you are able to convince an AD to arrange for Heathrow pick up... then it'd be a 20% discount.

hope this helps

[Expatbob]

Thanks - that's helpful. At charges of 5-7%, the saving on buying in UK, where my feeling is it will be harder to get a discount on the gross RRP in the first place, compared to Hong Kong, means that HK is starting to edge. Plus, UK means asking my wife to pick up - which involves responsibility of her carrying it (and not on her wrist), her poor negotiating skills, and freaking out at having to "smuggle"..

I was kind of hoping that outside of the major department store chains, the smaller ADs would charge a much lower % for processing the VAT refund... Oh well, thanks anyway

[esm]

Originally Posted by Expatbob

I was kind of hoping that outside of the major department store chains, the smaller ADs would charge a much lower % for processing the VAT refund... Oh well, thanks anyway

that i'm not too sure as i have not dealt with independent ADs yet. im sure Chris (the GMT master) will be able to advise.

how comfortable are you on buying from TRF's trusted sellers instead?

[Expatbob]

Originally Posted by esm

how comfortable are you on buying from TRF's trusted sellers instead?

Probably reasonably, once I've checked them out and seen enough favourable feedback... How does it work re shipping though? Anything that turns up in China via Fedex saying Rolex on it will get a stonking 40% charge before you can open your mouth!

[esm]

Originally Posted by Expatbob

Probably reasonably, once I've checked them out and seen enough favourable feedback... How does it work re shipping though? Anything that turns up in China via Fedex saying Rolex on it will get a stonking 40% charge before you can open your mouth!

no idea mate. im sure the sellers will be able to advise via PMs

[toph]

Originally Posted by esm

the ADs you mentioned about are registered for VAT. the VAT is 20% atm, and you'd get back about 13 - 15% depends on the AD and the total amount you spent with them (the more you spend = more VAT refund).

it is unlikely to find a Sub C at Heathrow these days, unless you are able to convince an AD to arrange for Heathrow pick up... then it'd be a 20% discount.

hope this helps

I have never heard about the more you spend the more VAT you get back? anywhere.. ever. maybe i am wrong but if you are not due to pay VAT .. you dont pay it in my experience.

Just to say you dont get 20% off ...that not how it works.

Its the initial price +20% VAT
£4950 less 20% is £3980 NOT correct!!

BUT its actually approx £4150 plus 20% is £4950
so the discount is actually £800 which is approx 16%.

[esm]

Originally Posted by toph

I have never heard about the more you spend the more VAT you get back? anywhere.. ever.

not from every AD/department store/jewellery shops.

but there were a couple of occasions that i was able to claim more by "combining" multiple purchases in one go.

[toph]

Originally Posted by esm

not from every AD/department store/jewellery shops.

but there were a couple of occasions that i was able to claim more by "combining" multiple purchases in one go.

Thats really weird how does that work?

[esm]

Originally Posted by toph

Thats really weird how does that work?

i/we go in, buy stuff, they calculate the figure by using some sort of paperwork....

to be honest though.... my wife does the paperwork bit every time while i make sure my toys are packed in the boxes/bags properly

[The GMT Master]

I know the place I work deals directly with HMRC for the VAT rebate scheme - no charges, and it means the full amount is refunded to the customer. As Toph pointed out, it works out at about a 16.6% real-term discount before any additional discount negotiated on top of that. In terms of how it works, the customer and AD fills in a form declaring the item, the amount paid, the amount to be refunded, and the customer's home address and the details of the credit/debit card they paid on. This then has to be stamped by UK customs, and returned in a provided envelope to the AD. When this arrives, the AD will refund the amount directly to the customer's card. It's a useful option to have if you reside outside of the UK

[Expatbob]

Originally Posted by The GMT Master

In terms of how it works, the customer and AD fills in a form declaring the item, the amount paid, the amount to be refunded, and the customer's home address and the details of the credit/debit card they paid on. This then has to be stamped by UK customs, and returned in a provided envelope to the AD. When this arrives, the AD will refund the amount directly to the customer's card. It's a useful option to have if you reside outside of the UK

Thanks for info... In terms of how the scheme works then, does the purchaser need to be there in person to complete the form? If I was to go down the UK route, my wife would purchase it when she's back in a few weeks time and fill in the 407 and claim the tax back at Heathrow. I'm obviously very interested by the fact that you don't charge for the scheme, but I don't know where you're based, or whether you can still take advantage of the scheme if you do mail-order (also assuming that this is possible...)

[Puffy]

Wempe at Bond St has Sub Cs and can offer VAT back.

[Expatbob]

Originally Posted by Puffy

Wempe at Bond St has Sub Cs and can offer VAT back.

Thanks... It sounds like most big chain ADs and department stores will. The issue is how much they charge for effectively stamping a bit of paper, and then crediting back the VAT to your credit card once they get the completed form back. 5 - 7% (a couple of hundred pounds) seems quite steep, especially when some ADs apparently do at no cost, although I can appreciate why for the likes of Selfridges, there's a lot of work involved given the number of people who shop there from outside the EU.

[Ck8]

Originally Posted by Expatbob

Hi,

I live in China where import duty is 40%, so puts the price of a new SubC at GBP equivalent of c.£5,769 (USD 9,256, HKD 72,155) - all at today's spot rates, rather than tourist rates, so likely a bit more.

Notwithstandng one should technically declare it where I to bring it back into China, it clearly makes sense to either pop down to Hong Kong where RRP is HKD 56,800 (no sales tax, GBP equivalent 4,541), or buy back in UK where RRP is GBP 4,950, and then claim back the sales tax (20%, GBP equivalent 4,125).

On paper therefore, UK is marginally cheaper, ignoring additional cost of flight to HK, FX charges and potential for negotiating a discount.

However, from what I've read, to be able to claim back VAT, the retailer has to be registered for the VAT refund scheme - major department stores in London are, but not sure about smaller ADs. Also, I've read that as a "cost" of adminstering the scheme, retailers deduct an admin charge - in some cases up to 5%!!! Therefore, the difference starts to get merge!

Does anyone know which ADs in London participate in VAT refund scheme, and what their charges are? The list of London dealers I've identified is:

- Selfridges / Harrods

- Goldsmiths
- Mapin & Webb
- Watches of Switzerland
- Ersnt Jones
- Wempe

Obviously, you can also buy duty free (and get the full 20% discount on sales tax) at Heathrow, but you'd be extremely lucky to find one there, and by that point, it's a bit late as you're leaving the country!

Grateful for any comments on experience of purchasing in this way..

ps - whilst i don't technically condone not paying duty, the fact that china chages 40% means that *no-one* in China buys in any luxury branded store - they are just giant showrooms for people to then go down to Hong Kong! Obviously any saving disappears, mind, if I get stopped at customs on the way back in!!

Mapping and Webb has a shop at Heathrow T3 and you call them and order the watch to be there when you depart from the UK and you would get the watch tax free therefore should equate to 20% rather than 15% if you buy in the high street.

[Expatbob]

Originally Posted by Ck8

Mapping and Webb has a shop at Heathrow T3 and you call them and order the watch to be there when you depart from the UK and you would get the watch tax free therefore should equate to 20% rather than 15% if you buy in the high street.

Tried T5 and got a definite "no" to getting in a SubC for when I was passing. Also tried T3 and got same message. She seemed willing to get in a watch they didn't stock, but not this model unfortunately.

Back to searching for an AD in London that has one in stock (not impossible, and happy to pay deposit, or even full price, over the phone), and is also willing to pass full 20% (16.67%) VAT refund.

[Ck8]

Originally Posted by Expatbob

Tried T5 and got a definite "no" to getting in a SubC for when I was passing. Also tried T3 and got same message. She seemed willing to get in a watch they didn't stock, but not this model unfortunately.

Back to searching for an AD in London that has one in stock (not impossible, and happy to pay deposit, or even full price, over the phone), and is also willing to pass full 20% (16.67%) VAT refund.

If you do find the watch in Mappin and Webb, Watches of Switzerland and Goldsmiths they are the same company. Ask them to transfer the watch to Mappin in T3 and buy it on the way out. When you are buying from T3 you get it without tax.

[mactrack]

Originally Posted by Ck8

If you do find the watch in Mappin and Webb, Watches of Switzerland and Goldsmiths they are the same company. Ask them to transfer the watch to Mappin in T3 and buy it on the way out. When you are buying from T3 you get it without tax.

I have asked to do this before and was met with a no.

[Expatbob]

Originally Posted by mactrack

I have asked to do this before and was met with a no.

The T5 M&W branch seemed open to getting in watches that they didn't hold, but was a definite no for the SubC, so difficult to know whether they were serious or not... Either way, if it's a popular watch you're after, relying on getting one 100% duty free at the airport is a long shot

[Fearsome Puppy]

Bob

I've purchased a Panerai from selfridges before and the tax rebate works out at about 12%. As for China customs I wouldn't worry too much as I've walked through customs at Pudong airport with multiple Rolexes and all sorts of stuff that should be technically declared many times, the staff there are usually half asleep or too busy picking their noses. Saying that I've heard that China customs are taking a hardline with iPads/iPods at the moment.

Good luck purchasing on your travels...

[Expatbob]

Originally Posted by Fearsome Puppy

Bob

I've purchased a Panerai from selfridges before and the tax rebate works out at about 12%. As for China customs I wouldn't worry too much as I've walked through customs at Pudong airport with multiple Rolexes and all sorts of stuff that should be technically declared many times, the staff there are usually half asleep or too busy picking their noses. Saying that I've heard that China customs are taking a hardline with iPads/iPods at the moment.

Good luck purchasing on your travels...

Cheers for response! Just for clarity, did you get back 12% when VAT was 17.5%, or since the increase to 20%?

Been through PVG with 3 huge suitcases and never been stopped - they seem to pick on locals more than expats to be honest.

[Fearsome Puppy]

NP. I purchased it in June 2010 so I guess at the time VAT would have been 17.5%. Agree think that they will target the local smugglers first before expats.

Flying myself to London tomorrow so hope to do a bit of watch gazing at Selfridges and around the Bond Street area.

PS: When I got my PAM from Selfridges they also threw in a OEM strap which sweetened the deal a bit aside from the VAT rebate...

[Expatbob]

Just out of curiosity, what did you have to show in Selfridges? I have a UK passport, although it has a China residents permit, which would prove I'm eligible for the scheme, but do sales people understand visas, or would they only fill in the form if you had a non EU passport? My argument would be that I'm paying full price anyway at point of sale, so it's of no concern to them what my tax status is - that will be determined at customs on leaving the country.

In the meantime, I phoned Mapin & Web who gave me the details of the company who provides their VAT refund scheme - apparently there are only 2, and I imagine their charges are similar. This one was Premier Tax, so I looked them up and then called them to clarify their charges!

For the £4,950 full RRP SubC, the VAT is £825 (16.67%). Of that, they refund £679, keeping £146 as an admin charge. Get back 82% of the VAT..

I imagine all the big chain ADs in London will use companies to refund the VAT, so if you can't get at the airport, you probably don't have any choice.

[brandxbrand]

Originally Posted by Expatbob

I have a UK passport, although it has a China residents permit, which would prove I'm eligible for the scheme, but do sales people understand visas, or would they only fill in the form if you had a non EU passport?

It is unlikely you qualify. I am a British citizen, but also hold a US passport (duel nationality) and accidentally produced my British Passport to claim back taxes when I was at LHR earlier this month. Honest mistake, because I could prove I am actually a US resident. The fella behind the table made it quite clear that only people that hold valid passports to non EU countries may claim back... no work visas, no student visas, etc.

Also, when you claim your refund forms at Selfridges, it's done in an office downstairs, and they won't even let you through the door without a non-EU passport.

[Fearsome Puppy]

Just saw this after my last post. I have a UK passport and have claimed back tax and as mentioned I purchased at Selfridges. Though as this was last June when I last claimed back VAT I'm not sure if the rules have since changed.

I hope not....

Originally Posted by brandxbrand

It is unlikely you qualify. I am a British citizen, but also hold a US passport (duel nationality) and accidentally produced my British Passport to claim back taxes when I was at LHR earlier this month. Honest mistake, because I could prove I am actually a US resident. The fella behind the table made it quite clear that only people that hold valid passports to non EU countries may claim back... no work visas, no student visas, etc.

Also, when you claim your refund forms at Selfridges, it's done in an office downstairs, and they won't even let you through the door without a non-EU passport.

[Expatbob]

Originally Posted by brandxbrand

The fella behind the table made it quite clear that only people that hold valid passports to non EU countries may claim back... no work visas, no student visas, etc.

I was kind of afraid that I'd have to deal with some poorly educated jobsworth who didn't understand the rules. I've just checked the HMRC (government's) website and the rules state quite clearly it's where you LIVE that determines your eligibility, not where you hold a passport from.. http://www.hmrc.gov.uk/vat/sectors/c...s-visitors.htm

You shouldn't be challenged by some numptie in the shop, especially as you're not trying to do the retailer out of anything - it's for customs at the airport to determine whether you're eligible or not. A UK passport with, in my case, a Chinese resident's visa, with entry/exit stamps proving I spend 99% of the year in China, would more than be sufficient, I would hope.

As it happens, wasn't going to use Selfridges anyway, but as I originally posted, I am a bit concerned that given the vast majority of claimants will hold non EU passports, they might not understand the rules, but wouldn't necessarily want to get into an argument over it. Guess would just have to return the watch and buy somewhere that did...

Unneccesary stress (especially when getting my wife to do this anyway) - and that's before we get to the "smuggling" part!

[Fearsome Puppy]

Bob

UK passport is fine, my understanding of VAT tax back is based on the reasonable assumption that the purchased item is bought with the intention of export/usage outside of the EU.

If buying at Selfridges your UK passport should be sufficient as they are more interested in the passport details/outbound flight details (rather than visa details), note that their system is electronic so unlike other handwritten VAT tax back forms from other retailers you need the details for them to process (also you can complete the tax process with Selfridges within a certain time period, not necessarily the day of purchase).

To valid the VAT tax back form with the all important customs stamp you'll have to do this at the UK airport before you fly. I usually do this airside and hand-carry the item. Here can be more problematic depending if you get a moody customs official, I had some grief with the residents visa permit (them questioning whether it was a tourist visa vs resident) so would recommend you also take your Alien Employment booklet with you if you want to be on the safe side.

Hope this helps...

Originally Posted by Expatbob

Just out of curiosity, what did you have to show in Selfridges? I have a UK passport, although it has a China residents permit, which would prove I'm eligible for the scheme, but do sales people understand visas, or would they only fill in the form if you had a non EU passport? My argument would be that I'm paying full price anyway at point of sale, so it's of no concern to them what my tax status is - that will be determined at customs on leaving the country.

In the meantime, I phoned Mapin & Web who gave me the details of the company who provides their VAT refund scheme - apparently there are only 2, and I imagine their charges are similar. This one was Premier Tax, so I looked them up and then called them to clarify their charges!

For the £4,950 full RRP SubC, the VAT is £825 (16.67%). Of that, they refund £679, keeping £146 as an admin charge. Get back 82% of the VAT..

I imagine all the big chain ADs in London will use companies to refund the VAT, so if you can't get at the airport, you probably don't have any choice.

[sportsmaven20]

I know I may be opening myself up here, but I feel like the Geico caveman living under a rock...what is VAT?

[Expatbob]

Originally Posted by sportsmaven20

I know I may be opening myself up here, but I feel like the Geico caveman living under a rock...what is VAT?

Value Added Tax... Sales tax...

[sportsmaven20]

Originally Posted by Expatbob

Value Added Tax... Sales tax...

Thank you Expatbob!