Questions of Cash: 'DHL levied a £7.20 fee to collect £6.80 in VAT'

An Independent reader spent £34 on a health supplement from a US website

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Q. I had to pay a £7.20 administration fee to make a VAT payment of £6.80. Am I unreasonable to think this is outrageous?

I spent £34 on a health supplement from a US website; VAT is charged at 20 per cent. I have no problem with this, but I have a big problem with DHL charging an administration fee of £7.20 to collect it from me. As far as I know, no UK domestic companies charge a separate administration fee for this. It is a cost of business. DW, London

A. Your experience highlights the risk of buying goods online from overseas retailers. While goods can seem cheaper than those from UK sources, they may be subject to additional VAT and import duties.

In this instance, you also had to deal with a handling fee imposed by DHL that was more than the VAT involved.

A spokesman for the delivery firm said: “We know that collecting VAT payments in this way can be slightly confusing. When buying goods in from overseas, you do have to pay VAT. Normally your shipper will pay this on your behalf, because there may otherwise be a long delay at customs while HMRC collects the duty, prior to clearing the goods for delivery.

”The shipper then collects the duty from you along with a small fee that covers the administrative cost of having paid the duty for you.

“A UK retailer, by contrast, is able to include VAT at the point of sale, which means no additional work is needed from the retailer and it does not have to charge any fees for recouping the duty on what you have bought. This is industry practice and DHL has the lowest fees for handling VAT payments for its customers on imported goods.

”Understandably, however, this can be frustrating for people who end up having to pay for what seems a hidden cost. Buying goods from overseas – which is increasingly easy to do – is sadly not quite as easy as buying them in the UK, and we encourage shoppers to factor VAT payments and fees into the total cost.“

Paypal brings down curtains on payment

Q. A few weeks ago I sold a pair of curtains for £100 on eBay and asked to be paid via my PayPal account. The curtains were bought and collected.

When I tried to extract the money from PayPal, I couldn't do it. Apparently, as I hadn't used the account recently, my money was to be withheld for 30 days. When I complained that the goods had been collected and I wanted my money, I was told it was not possible. Clearly I had to be punished by PayPal for not using its service enough.

It took 30 days to retrieve the money, less its £3.40 service charge. This was on top of the £10 commission I paid to eBay. The sale therefore cost me 13.4 per cent and a long wait for the money. DP, London

A. Commissions charged by eBay and PayPal are not cheap and it is important that users understand the costs and the risk of delays in receiving payment.

A company spokesman said: ”For the vast majority of the almost 9 million transactions PayPal processes every day, the payment happens without incident and our customers have access to their funds immediately.

“However, PayPal never loses sight of the fact we're entrusted to look after people's money. We have a responsibility to keep funds safe and protected from criminals, to uphold buyer and seller protections and to ensure money is moving around the world in compliance with laws and regulations.

”Sometimes this requires us to look more carefully at a transaction before it goes through. Sometimes we hold on to funds from a sale for a short period to make sure both the buyer and seller are happy with the transaction. We find that usually within 21 days of a sale, a buyer has sufficient time to receive their goods and report any issues.

“In [the reader's] case, he has used PayPal sporadically over the years, so he had to wait 20 days for his funds to be released. Typically if an account in good standing takes more sales receipts, the likelihood of temporary holds being placed on that account will decrease.

Customers can also speed up the process by entering a tracking number into the transaction details, and marking the item as shipped. Unfortunately [the reader's] sale was collected in person.”

Why haven't petrol prices fallen with oil?

Q. Why haven't petrol pump prices come down now that the crude oil price is below $50 a barrel? SG, Hampshire

A. Luke Bosdet of the AA said: “Earlier this year, when oil was worth around $45 a barrel, the commodity price of petrol was around $470 a tonne. Now, with oil back at the same level, commodity petrol [the refined product] sells at around $530 a tonne. This means commodity petrol is more expensive than at the start of the year.

”Why? Because demand for petrol takes off in the summer, particularly in the US and this heats up prices. This year's US summer demand has been 500,000 barrels a day higher than last year. The bottom line is that the UK doesn't have the transparency – wholesale v pump prices, taking into account the dollar/pound exchange rate – enjoyed by drivers in the US, Australia and South East Asia.“

The AA is calling for greater transparency on the part of the fuel industry.

Questions of Cash cannot give individual advice. But we’ll do our best to help if you have a financial dilemma. Email us at: questionsofcash@independent.co.uk

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