Does Ritchie know what \”illegal\” means?

A hint: illegal is not a synonym for something Ritchie disapproves of.

So, on low value consignment relief for VAT we get this from the Telegraph.

Up until now, the UK government was concerned about facing possible legal action if it attempted to stop the likes of Amazon, HMV and Play.com from exploiting a legal tax loophole that enabled them to ship goods to the Channels Islands and then back to UK customers minus the cost of VAT.

The EU has now given assurance to the treasury that it is perfectly within its rights to abolish the \”abusive and restrictive\” trade.

A change to the law that would see an end to the multi-million pound Channel Islands industry could be enacted as early as this autumn.

As background, you need to know that LCVR is part of European law: the UK can independently vary the amount to which it applies, but not the existence of LVCR itself.

At least, that\’s what we all thought until this bit of EU clarification.

Note that we\’re not told what the clarification is as yet but this is not the major point. That major point is, look see, \”A change to the law\”.

Keep that in mind.

Having quoted the above R. Murphy Esq, one of the country\’s leading tax experts, tells us that:

So, now we know: this abuse is illegal and can be stopped without fear of legal challenge or claim for compensation against the UK arising.

Err, no. This \”abuse\” is not illegal. That\’s why the law has to be changed so as to make it illegal.

Remember: illegal is not a synonym for things that Ritchie disapproves of.

This next part is simply hilarious. For Ritchie is, as we all know, also one of the country\’s leading economists. Isn\’t he?

And what will he spend the £200 million or so a year he will collect on? Youth services, maybe? Wouldn’t that seem just?

So when will we see action from George Osborne to stop tax abuse, end tax haven activity, support the UK High Street, maintain UK jobs and ensure that the valuable role of UK music shops in offering diversity to consumers is upheld? And what will he spend the £200 million or so a year he will collect on? Youth services, maybe? Wouldn’t that seem just?

What £200 million?

We can say that consumers are not paying £200 million in VAT by buying through the Channel Islands (rather an over-estimate I would have thought but still…), yes. But that does not mean that consumers will now pay £200 million more in VAT as a result of not being able to buy through the Channel Islands.

The complete abolition of LVCR will mean the end of the Channel Island trade, I think that\’s reasonably clear. So there\’s not going to be any revenue collected by the Post Office then.

And consumers will now face a 20% price rise on their purchases of DVDs, ink jet cartridges and all the rest. So a question to one of the country\’s leading economists. Demand curves: upward sloping? Downward? Flat?

Quite, the general assumption is that they\’re downward sloping, isn\’t it? So sales of these items will fall (by some unknown amount) and the tax collected will not be the same as the tax previously \”lost\”.

What £200 million?

 

12 thoughts on “Does Ritchie know what \”illegal\” means?”

  1. “…….ah, has anyone got a bottle of beer?”
    A man in the corner indicated that he might have such a thing.
    “Fine.” said Nanny Ogg. “Anyone got something to drink a bottle of beer out of?”
    Another man nodded hopefully.
    “Good.” said Nanny Ogg “Now has anybody got a bottle of beer?”

    Maskerade
    Terry Pratchet

  2. “…….ah, has anyone got an opener for a bottle of beer?”
    A man in the corner indicated that he might have such a thing.
    “Fine.” said Nanny Ogg. “Anyone got something to drink a bottle of beer out of?”
    Another man nodded hopefully.
    “Good.” said Nanny Ogg “Now has anybody got a bottle of beer?”

    Maskerade
    Terry Pratchett

    (Blast! The perils of answering the fone & posting simultaneously.)

  3. Of course, in the story, Nanny Ogg got her beer but that just shows the difference between a character of pure fantasy & a Discworld witch.

  4. Please do not label him as one of the countries leading tax advisors – he isn’t, and on occasion has proved his lack of tax knowledge when writing some of his “pieces” (his ignorance of substantial shareholdings relief, one of the main corporate tax exemptions, when writing about company effective tax rates springs to mind)

  5. @JohnG – You’ve not read Making Money then? It, and to a lesser degree, Going Postal, are all about things like value. Anyway, the Discworld is a mirror of worlds and has been interested in the reflected-sounds-of-underground-spirits from the first book, and there are even formalised expressions like Sam Vimes Theory of Economic Injustice.

  6. “…ensure that the valuable role of UK music shops in offering diversity to consumers is upheld? ”

    hahahahahahahaha… spluttter.. cough…

  7. “A hint: illegal is not a synonym for something Ritchie disapproves of.”
    Actually in his world it is !

  8. Tim, you’re making the fundmental error of analysing the whole economy again. I recommend going away for a week with a collection of Murphy’s writings, and reading them all, so you can understand how important it is to only analyse those parts of the economy that support your beliefs.

    Central to Murphynomics is the belief that (a) all taxes come from “profits” and (b) “profits” are a kind of magic money that vanishes from the face of the Earth as soon as it is earned; ergo it is the job of the State to capture them for Good Works before that happens. £200M in profits is, in Murphynomics, literally £200M lost to the economy, forever.

    The correctness of Murphy’s view is easy to prove rigorously. You just have to refuse to acknowledge the existence of the money after it has become a profit and then, just like magic, the black hole all the profits fall down is revealed.

  9. Thousands of innocent Channel Islanders out of work and decreased demand for goods as the price of leisure commodities skyrockets, harming a weak economy.

    There’s only one conclusion: Richard Murphy hates everyone. Maybe that’ll be the shocking twist in “Courageous State,” out soon in all naff bookstores.

  10. It also misses the point that the cost of collecting VAT on goods posted from outside the EU would considerably exceed the revenue thus generated.

    The limit here in Germany, I think, is €20. In VAT terms, that’s €3.80 (and of course half that for, say, one DVD at €10). For which they do indeed post you a letter, saying you have to collect something at the local customs office, make you go there, and engage no fewer than three public servants (one to notify your presence, one to pay the bill, one to collect the package). LCVR actually saves the government money.

  11. I should clarify that you of course only have to do the procedure for a consignment above the limit. Even German bureaucracy has its limits (this extends as far as writing off annual income tax discrepancies of under €10 – something the UK could learn from instead of posting out demands or cheques for 26p.)

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