How I Avoided a $15,000 Tax Bill

By Gaz under Bikes & Cars, Travel

But first a little background…

Last year, Tave and I cashed in all our assets, sold our cars and quit our jobs so that we could scrape together every penny we had to finance our holiday of a lifetime: to ride the length of US Route 66 on Harley Davidson Motorbikes. We planned to spend 3 months really soaking it up, starting in Chicago on October 11th 2006, but hiring the bikes was too expensive. Customs and Excise allow British citizens to import one vehicle per year provided the time between buying and importing is at least 6 months, so we decided to buy the bikes outright, and bring them back to Blightly at the end of the trip. To meet the 6 month ownership criterion, we broke our trip up into two parts which allowed us to come home to spend Christmas with our family and friends before returning to finish Route 66, and then finally to put the Harleys on a ship back to England. They left America on April 12th, and arrived in London yesterday just barely squeezing into that 6 month limit.

Our continuing travel itinerary had been to enjoy the Summer biking season here in England, attending bike rallies and the like with our British friends, and to then head out across Europe around August, exploring half a dozen mediterranean countries before flying to the Philippines for the Winter. We would have sold our Harleys before we took the plane to Asia now that they would be a year old. I even had the buyers lined up, and thanks to the inflated value of Sterling right now, stood to make back most of the cost of buying and shipping the bikes. I’d even set aside $4000 for import duty incase I’d missed some detail in the fine print of regulations for vehicle import.

I called the shipping company last week to be sure everything was going smoothly, and to find out what I needed to do to clear customs and collect the bikes in a few more days. They, in turn, asked that I called customs to collect some important numbers for the paperwork, and to check that I had met the personal import requirements. My call was answered by a particularly pompous pen-pusher who seemed to delight in telling me that I needed to have had a permanent US address for at least the two months immediately prior to export. Otherwise they would consider that the bikes were being imported for business purposes. I tried to explain that we had been touring America on the bikes last year, and planned to tour England for the next few months before leaving for Europe on them; that they were our own private bikes that we wanted to enjoy being tourists around our home contintent for the Summer. He seemed to delight in informing me that since I couldn’t prove my residence at a US address for 2 continuous months, I would have to pay 10% import duty, plus 17.5% value-added-tax on the full retail purchase price of the bikes (even though they were already 6 months old) and my shipping costs from America (what extra value I get from giving the UK government 27.5% of the shipping costs I’d already paid US taxes on escapes me) - a total in excess of US$15,000; more, in fact, than the full retail purchase price of one of the bikes.

Although I was beginning to lose my temper by now, I asked whether he thought that it was fair that individuals like myself, and potential tourists bringing money into the UK economy should be penalised so heavily, but was met with high-and-mighty, “It’s the law. We don’t change it just for you, that’s what you will pay if you want to bring your motorcycles into the country.” I told him that I would rather drop the bikes in the sea than be party to legalised robbery, and hung up the phone, exasperated.

There are certainly loopholes in the system that I could have exploited:

1. I know VAT registered small business owners in England, and could have asked them to finalise the import and claim back the $15,000.
2. I could have asked a friend in the US if they would corroborate a lie to Customs that I had let a room from them for 2 months.
3. I could have taken the bikes apart in America, shipped the pieces as spares, and had them reassembled after clearing customs.
4. I could have given Customs a $15000 interest free loan for 6 more months and collected it back when I reexported the bikes.

But, I’m an honest person, and tried to do things by the book to avoid any undue stress, and yet UK Customs and Excise saw fit to penalise me for my honesty. Judging by the huge number of American cars and bikes I see advertised for sale in England at the moment, I have no doubt that a huge number of less honest business people have taken full advantage of these loopholes to bring vehicles into the country purely for profit, and that the system favours them enormously.

So, how did I avoid the bill? I gave another $2500 to the shipper, and asked them not to uncrate the bikes or prepare them for customs clearance, but to put them back on the next ship to the closest port in America. Instead of braving England’s famous inclement weather, and wasting our weekends polishing the rain marks off the acres of chrome on our Harleys, we now have $12500 to finance a long Stateside Summer vacation starting when we meet the bikes in Miami, FL in about a month. When our US tourist VISAs expire, and if my UK buyers are still keen enough, I might show UK customs the deeds for my 2.5 acres of Arizona desert as proof of permanent US address to bring the bikes back for them. More likely, we’ll sell the bikes in the US and continue to head West around the world, and not trouble the UK economy with our tax dollars or their inflated living expenses until we’ve circled the globe by 2009 or so.

What ever happened to Great Britain? Good riddance to bad rubbish. I’m out of here.