Bringing Jewellery into the UK

Gent's Rolex

On our page about Buying Jewellery Abroad we give general advice including whether to declare it at Customs. We will repeat our advice about declaring it at Customs, before telling a true story which should serve as a warning to all.

The Price of Smuggling
If you are caught trying to smuggle goods, you are at risk that they may be confiscated. If not, you may be given the option to pay the tax plus the same again as a penalty. This will be based on Customs and Excise estimate of the value of the goods, not on your cost price, so you may end up paying not double, but treble or quadruple what you would have paid if you had declared the goods. If you try ever sell or exchange the goods, the purchaser may acquire your tax liability as it is illegal to deal in smuggled goods, and they remain subject to forfeiture and worse. You would be well advised never to take the items on holiday, because you could be stopped the next time, or even the twentieth time you entered the country wearing them. If you got caught smuggling, you could end with with a criminal record. Balance all these points, and we believe that any intelligent person would agree with our advice that it's a poor gamble to take.

A True Story About Smuggling
Would You Buy a Used Watch off this Man?
Some years ago a local car dealer bought a second-hand gold Rolex watch in Florida, presumably from a pawn shop. He got it at a good price, and managed to smuggle it into the country past Customs & Excise. At the time, similar new Rolex watches sold for about £7,000 in the UK, and he had paid about £3,000 for it, although we don't know the exact prices.

A Respectable Jeweller
Some time later he sold it for cash at a profit to a local jeweller who deals in second-hand. The jeweller resold it to a local businessman, a respectable hotelier, once again for cash. He also failed to record the purchase or sale through his books. At the time there was no VAT relief on second-hand goods at that time, so in one sense the raising of VAT on second-hand goods was unfair, but it does not provide an excuse for tax evasion.

The Business Traveller
The successful businessman proudly wore his watch all the time, including during frequent business and holiday trips abroad. On his return from one of these trips, he was stopped in a random check by Customs, and asked if he had anything to declare, the answer was negative. The Customs officer commented on his expensive watch and asked him had he bought it abroad. The hotelier was able to give an honest reply, and when asked whether he had any proof of where and when it was purchased, he was happy to give answer this question accurately. He had nothing to hide and no reason to think there was any problem. End of story for now.

Routine VAT Inspection
Shortly after, during a "routine" VAT inspection at the jeweller's, the VAT inspector looked through both sale and purchase records, and failed to find any record of the transaction. He then quizzed the owner about whether all transactions had been accurately recorded, and receiving an affirmative answer, then proceeded to inform the jeweller that they had reason to believe that there were unrecorded transactions. When faced with the fact that Customs knew about this particular watch, he eventually admitted it, although we do not know whether any other unrecorded transactions were also admitted. the jeweller was presented with a large Customs demand for their estimate of their lost revenue, he had to employ his accountant to deal with the claim, and ended up paying many thousands of pounds in unpaid tax, plus a similarly large penalty. The Inland Revenue also presented their demand for unpaid tax on the concealed profits, and this necessitated more accountants fees, and attracted a further penalty payment plus interest. the jeweller aged about ten years in appearance in only about two years. He had to divulge the identity of the car dealer. Of course the penalty the jeweller paid was mainly because he had been concealing many second-hand deals, but he was caught because Customs are continually alert for smuggled goods. Even if the watch had not been smuggled in the first place the jeweller would still have been in the same trouble.

The Car Dealer Also Pays the Price
We don't know precisely what penalty the car dealer faced, but we can imagine that in addition to the unpaid VAT, and a penalty, he probably went into the VAT files as a smuggler, and this will have been known to any VAT inspector during routine inspections.

Smuggled Goods Remain a Liability
The main point in this story is that many people wrongly believe that once they have cleared the green channel, they have got away with whatever they smuggled. Now if it's a few bottles of whisky too many, the evidence soon disappears, but when the goods are durable ones, then the evidence sticks around in full view for many years. Under these circumstances, it is clearly irresponsible and stupid to smuggle the goods by failing to declare them for Duty and VAT, especially so in view of the relatively small amount payable. The fact which we find fascinating is that almost everybody seems to think it's a normal and smart thing to do!

As usual, we welcome all comments and feedback:-