This is fascinating

About Low Value Consignment Relief on shipments from the Channel Islands, Ritchie tells us that:

I’ll tell you – although Gauke is not doing so – that the EU has said the UK has carte-blanche to act to stop this abuse altogether – so the only question now is when will they do so?

I\’m not quite sure how this can be true.

LVCR is a general rule that applies to all countries within the EU and all countries without it. It is possible for each individual country to vary the amount that is defined as \”low value\”, true, but even then only within certain prescribed limits.

I think I\’m right in saying (and am open to correction) that it cannot be less than € 10 and cannot be higher than €20.

The UK can cut the LVCR number to €10: but I\’m reasonably certain that it cannot abolish it.

6 thoughts on “This is fascinating”

  1. http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/8678915/Channel-Islands-VAT-loophole-to-close-this-year.html

    Tim adds: Yes Arnald, and as it says in that piece:

    “A spokesman for the Treasury said: “The position remains as set out by the chancellor in the Budget: The Government will reduce the Low Value Consignment Relief (LVCR) threshold from £18 to £15 from November 2011.

    “The Government will also revisit the level of the LVCR in Budget 2012, if discussions with the European Commission do not produce a workable solution to the problem of exploitation of the relief.” “

  2. From a bunch of people that don’t like Play, Amazon etc:

    http://www.vatloophole.co.uk/what-can-be-done/

    “1) The UK could immediately apply the lowest threshold applicable for the relief of low value consignments . Under the LVCR legislation this would be 10 Euros which equates to approximately £8.50 ”

    In any case, I don’t really get the brouhaha. LVCR was set up because it was thought collecting VAT on such small amounts cost more in admin than it would bring in in tax.

    If this is still true, this isn’t abuse, just sensible.

    If it’s not true, eg because the volume of sales of Play etc requires sales systems from which the correct amount of VAT can be determined cheaply, the EU needs to change the law on LVCR.

    In the meantime, it seems to me that most of those campaigning on this issue are really just lobbying to raise the average price of a CD. Woo.

  3. Aren’t the people demanding that we remove this VAT rule (extending VAT) also generally the people complaining that VAT is a horribly regressive tax that actually goes out every evening and beats poor orphans to death?

    I know Ritchie has started campaigning for tax transparency – and sales taxes are right in your consumerist face (although I’ll admit that, economically sensible though it is, it irritates me the way the Canadians and Yanks do it with them added to the sticker price, especially the Canucks with GST and PST), especially compared to his beloved corporation tax.

    But then I’m a fool for expecting even the slightest hint of consistency between their differing hysterical demands, am I not?

  4. Yeah, but Worstall, this is what Murphy was saying, as from the article and all literature about it

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

    The Ci’s seem to believe they are immune to EU influence, but they are not immune to UK influence. If the UK want to dodge yet another responsibility, that its problem.

    But the statement that the UK can do what it likes is true.

    As isn’t your bumptiousness who doesn’t know the slightest thing that is being argued, this and the rest of the tax avoidance industry (quite amusingly infantile in fact)

    “The UK can cut the LVCR number to €10: but I’m reasonably certain that it cannot abolish it.”

    So your “reasonably” is pox.

    Tim adds: But Arnald, LVCR is an EU idea, regulation and law. So hte UK cannot unliaterally abolish it. They can only do what that law says the UK can do. Which is, as I say I believe it is anyway, that it cannot be lower than €10.

    If you can point me to the evidence that I’m wrong I’d be most grateful.

  5. Aren’t the people demanding that we remove this VAT rule (extending VAT) also generally the people complaining that VAT is a horribly regressive tax that actually goes out every evening and beats poor orphans to death?

    DVDs and CDs aren’t quite clothes, shampoo, razors and tampons, are they? (my lifestyle doesn’t entirely suck, but I haven’t bought a DVD or CD in months….)

  6. Tim, the UK can ask the EU for permission to derogate from the VAT directive thus removing the deminimis from certain categories of import. So they can set the deminimis at Euro10 but also then say that it does not apply to imports of certain categories of goods such as DVDs and CDs.

    If you look on the EU’s web site at:

    http://ec.europa.eu/taxation_customs/taxation/vat/key_documents/table_derogations/index_en.htm

    That sets out the proceedure and lists the derogations presently in force. The derogation from Denmak on 14 March 2005 sets the relevant precedent for what the UK has announced it is intending to do. In that case magazines were published in the EU and then routed through non -EU states to avoid VAT. Denmark sought and obtained a derogation from the deminimis to collect VAT on those transactions.

    Of course the fact that it might cost more to collect than will be raised is neither here nor thier.

    In any event the largest music retailer in the world is now Apple and they don’t ship a single CD or DVD, perhaps that might have something to do with the collapse in sales of DVDs and CDs?

    I feel sorry for all those independent music stores which have closed down in the past 10 years but that has very little to do with LVCR and far more to do with the fact that technology made your business model redundant.

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