Is this tax evasion?

[Red Devil]

johnao said:

Ekona said:

Cunning scheme for a bit of tax avoidance, or obvious tax evasion?




... A believes this to be entirely legal as he gifted money to a friend, who then sent him over a completely unrelated second-hand item as B was the original owner...
So, fellow men of wisdom on PH, what say thee? Genius, or easy pickings for HMRC?

The Revenue would regard this, if they had knowledge of it, as an artificial arrangement the sole purpose of which is to avoid the relevant duties and VAT. And, if they could demonstrate that the UK resident was complicit in this arrangement and had designed the scheme with the deliberate intention of avoiding UK tax, and surely they could do so quite easily if they chose to initiate an enquiry, then they would regard it as a case of tax evasion and would seek some form of penalty or confiscation or prosecution, dependent upon how severe they considered the criminality involved.

Most advocates of this type of scheme will be relying on the Revenue not finding out. Not a sensible approach if I may say so.

But, the really serious consequence, if the scheme is "discovered" by the Revenue, is that they will ask the question... "how many times has this happened before and of which we have been unaware". Protestations of innocence along the lines of... "this is the first time I've ever done this, honest", will fall on deaf ears and earn the response... "that's what everyone says, sir". The Revenue can go back over six years of accounting records, longer if deliberate tax evasion is suspected. Does the creator of this scheme really want the Revenue going back over six years of accounting records examining every transaction with a fine tooth comb? I don't think so. Even if they find nothing it will be a very expensive and uncomfortable experience. They will look at everything from VAT returns, PAYE records, purchases, sales, Directors' benefits-in-kind, etc, etc; the enquiry won't be limited to just looking for similar import duty avoidance schemes. The Revenue will now consider all of his accounting records as being unreliable. It would be a complete nightmare.

HMRC don't need to demonstrate complicity by the UK resident to seek a penalty and confiscation. They can do so right off the bat if they so choose because he/she is responsible for payment of the correct amount of duty and VAT where applicable. Period. What some people fail to realise is that he/she is also responsible for ensuring that the sender fills in the customs declaration form correctly.

If HMRC suspect a deliberate organised scam may be being carried on then I agree with you. They will bear down on him/her. Very hard.

[Dimebars]

I'm sure "Person A" is delighted that you're looking out for his tax affairs OP in such a rigorous manner

[paintman]

So 'Person A' has his own business & want to try pulling a fast one with HMRC in the belief that he is cleverer than they are.
All well & good if he doesn't get caught.
But if he does then he can expect a thorough examination of ALL his tax affairs.

[catso]

Dammit said:

As has been said, you'll get charged on fair market value so marking it as a gift won't achieve what is hoped.

On a £400 item you'll get (from experience) charged an additional 25%, comprising duty, VAT, and whatever fee the logistics company decides to charge you for sorting that out.

Not sure on rates of duty for all different categories of goods but I have bought many things from the USA as a private buyer and have never been charged duty, they charge VAT on the declared value and there will be a handling charge from the carrier.

In past days of better exchange rates this could still be quite a saving over UK prices, even on goods made in the EU.

[subsea99]

Regardless if its secondhand or not like another poster said its the value the import duty goes on,i recently bought a set of mtb wheels from states and got hit with import tax even though not new