Country Process, Policy, Tax and Laws

Import of Goods and Movement to Store:

1. Any special forms or paper work to be done while importing products into London?

2. What is the import tax / duty on jewelry in London?

a. There is import tax / customs duty on import of jewels as per our knowledge. The category of the jewel
imported will be of the commodity code for importing 7113190000 which is subject to :
i. Importing from outside the EU is subject to a third country duty of 2.50 %.
ii. Goods are subject to VAT standard rate.
iii. This totals to total of 22.50% of import duty inclusive of VAT

Reference links from gov.uk as below for choice of commodity and catetory.

https://www.gov.uk/trade-tariff/chapters/71

https://www.gov.uk/trade-tariff/commodities/7113190000

3. Which port will the jewels arrive in London?

4. How will the goods movement happen into the store? (below are options)
a. Will goods be moved directly to the London Store?
b. Will we be setting up a warehouse/office to receive goods at London then move to office?
c. Will the good move directly to store?

5. What happens when selling consignment/exhibition stock?

a. What is process that needs to be completed with customs?

Retail Store:
1. Invoicing : Is it mandatory to give a copy of the invoice to the customer for any transaction or only when asked ?
2. Does sales of goods (Diamond Jewellery) entail any sales tax, VAT or GST?
a. There is a VAT of 20% in London on Jewellery products as per our knowledge
b. This VAT information needs to be shown on the invoice
i. % of VAT
ii. Do we also need to show the VAT Registration number ?
c. Any other taxes that need to be charged or shown on the invoice when selling ?
d. Is it mandatory appoint an agent to deal with HMRC for VAT and Taxes ?
3. What is maximum variance in Gold or Diamond weight mentioned on an invoice allowed in London?
4. Do we need to charge the customer for the plastic bags additionally ? e.g. 0.5 HKD in Hong Kong is to be shown on
invoice as a mandate.

5. Do we need to have any compliance or regulation text to be printed on an invoice?

a. Currently we have the following text printed which included return policy and diamond sourcing details
 b. What is the normal return policy that needs to be printed and in-place as per other jewellers in the vicinity?
c. Currently we display diamond and gold Wgt on the invoice are any other values required ?

6. Shipping to customers?
a. Do clients ask to ship products (jewellery) to residence?
i. I understand we will need to ship product to select customers.

6. Price Tags : Does all merchandize on display in the store need to have prices attached?
a. What are the details to be mentioned on the price tag?
b. For e.g. currently we have the following mentioned on the price tag : reference #, description, carat weight,
metal weight, colour , clarity, price and made in country

7. What document apart from the diamond certificates need to be shared with the invoice?
a. Currently we give a certificate of authenticity to the customer apart from the GIA certificates for diamonds
above 0.5cts

8. Is there any upper limit for Cash transactions in GBP?

9. Is there a requirement of credit card authorizations for processing payments?

10. Do we accept multiple currencies?

a. Do we accept USD and other international currencies at what mark-up are international currencies accepted
?
11. How are gift vouchers, discount and rebates managed in Retail stores in London?
a. Are we having any agreement with the landlord in terms of profit, revenue or sales sharing?
b. How do we handle discounts and rebate in London?
i. Are rebates treated as payments or deduction in invoice value? This is essential as we will need to
understand the Audit requirements to show discount and gifts. This will also affect top line or
payment ledger depending on how we plan to treat the rebate/gift voucher.
c. Is there any gift tax in London? This would be applicable when gifting a jewel to a customer.
d. Below are few points about charging VAT on
 Please see possibilities below:
Treatment
Payment
Case Type Value Invoice Value received from Remarks
Customer
Normal Product A1 MRP 20,000
20000 20,000 In all cases & types except Gift Upgrade, Product A1 is bought
Sale Sales Tax Rate 0%
Here the treatment is on the payment side as we are issuing credi
to the customer
Return CN issued of value 10,000 20,000 10,000 - 11,600 via Credit Card
Credit - 10,000 via Credit Note
Note The rest of the 10,000 is adjusted with CN as payment method
Used What needs to be done in this case ?
Return CN issued previously -does the customer need to forego the remaining 3,400
25,000 20,000 ??
(25,000) -does the pending amount remain outstanding under the custome
to redeeem next time
Previous Purchase Inv. Value 50000 Here the treatment is on the sales side as MRP value is reduced by
Rebate 2,500 to adjust the rebate value then tax is applied to get the final
5% of Previous Invoice value 17,500 17,500
used 2500 invoice value
Offered as Rebate
-the rebate is knocked off as a Marketing Expense
Internal Gift Voucher (5% of Treatment is on the sales side in MRP value is reduced by the valu
1000 19,000 19,000
MRP value) of the GV then tax applied for final inv. value
Internal Gift Voucher (5000 - internal GF will be applied via GV Codes
5000 15,000 15,000
Off) -GV is knocked Off as Marketing Expense
The customer needs to forego the amount above 21,600 i.e. 3,400
Internal GV (25,000) 25,000 0 0 as this is not credit issued to customer
Gift -How is tax handled in this case?
Voucher Treatment of the voucher is same as internal voucher
- External GF may be applied with or without GV Codes
-Depending on the agreement with the external party the knock
External Gift Voucher (5,000) 5000 15,000 15,000 off can be as follows :
1-if the voucher will be reimbursed by the external party then
knocked off against payments received from ext. party
2-Expense out as Marketing Expense
Gift Jewel Offered A1 20,000 The Jewel chosen by the customer is the gift jewel. Hence offered
free of cost to the customer.
-use tax on Gift MRP is borne by the company (in USA)
Customer chooses to
0 0 -if company has tie-up to co-sponsor the gift then depending on
redeem Gift Jewel A1 20,000
agreement
(no upgrade)
1-both parties pay use tax on the amount sponsored
2-NML bears full use tax
Gift
The Jewel chosen by the customer is of a higher value than the gif
Jewel Customer chooses a product
jewel.
of higher value than the gift
- tax is borne by the customer for value above the gift jewel
jewel offered.
- is use-tax payed in this case for the gift jewel value ?
-value of product chosen 26,000 6,000 6,000
-if company has tie-up to co-sponsor the gift then depending on
26,000
agreement
-value of the gift jewel is
1-both parties pay use tax on the amount sponsored
product A1 20,000
2-NML bears full use tax

12. How are returns of products handled in London?

 a. Is the customer given refund or a credit note? (treatment of credit note shown in above table)
b. Is it a full refund or partial e.g. 95% of invoice value?
c. Please see text from gov.uk for returns :
i. Returned goods
1. When you return goods to a supplier or a customer returns goods to you, the balance of
payment can be settled by issuing either a:
a. replacement invoice
b. credit or debit note
2. If you exchange the goods for goods of the same value you don't need to issue a new VAT
invoice.
ii. Credit and debit notes
1. These must show the same information as the VAT invoice and:
a. why it was issued
b. the total amount credited, excluding VAT ?
c. the number and date of the original VAT invoice

Please find attached various combinations of credit note possibilities and current policy:

Return – Credit
Note HK.docx

13. What is the SOP for collections ?

a. Please see file attached as below :

SOP Collection
Mehods London