VAT specialists at Grant Thornton in Birmingham have warned internet sale shoppers not to be caught out by extra costs when spending their money online with overseas retailers.
James Hurst, senior indirect manager at Grant Thornton's Birmingham office, said: "In recent years HM Revenue & Customs (HRMC) has seen a dramatic rise in the number of packages arriving in the United Kingdom on which customs duty and import VAT is due.
"In order to clarify the situation, internet shoppers need to be aware that VAT and duty implications apply on internet purchases that cost more than £18. The £145 'passenger's allowance' (duty free allowance) does not apply.
"Customs duty is not payable on goods bought from countries within the EU. However, VAT may be payable either in the EU country of purchase, or in the UK if the EU supplier is UK VAT registered.
"Even if the foreign sender completes the customs declaration form on the parcel, it is the importer of the goods that is responsible for the payment.
"Customs officers pay particular attention to parcels in the run up to and just after Christmas and, if declarations are found to be false or misleading, online shoppers maybe liable to financial penalties or criminal prosecution. Goods may also be seized.
"It really is in everyone's interests to make sure that customs' declarations are completed properly. Otherwise your online purchase may turn out to be a lot more expensive than you bargained for."