VAT and the Channel Islands

Attempts to stop the introduction of more stringent VAT rules on low value goods sent from the Channel Islands have been averted.

The Chancellor had announced last November the removal of the Low Value Consignment Relief (LVCR), which had allowed goods shipped from the Channel Islands worth less than £15 to ship VAT free.

Its abolition, from 1st April, was challenged by the Jersey and Guernsey governments, which said the move was discriminatory and illegal.

However, Law Lord Mr Justice Manning said the Treasury was within its rights to end the relief.

"This is a victory for common sense in what has become something of a case of David v Goliath," said Forum of Private Business senior policy adviser, Phil McCabe.  "But the judiciary has today reaffirmed what George Osborne said in November, that LVCR  is tax abuse and avoidance, plain and simple, and has to stop."

"Unfortunately it is too late for countless small firms which went to the wall, unable to compete with giants such as Amazon and Tesco, who have been able to unfairly use this loophole to avoid paying billions in tax and undercut their small rivals by significant margins."

"Had the government's decision been overturned there would have been serious consequences for high streets across the UK."

The real question is now whether the big companies will put up their prices by 20% or whether they will absorb the cost in the short term.

Royal Mail - VAT changes

Following the Postal Services Act 2011, the VAT status on a number of Royal Mail products have changed.

Please follow the link below for more information as to:

• Products which are already liable for VAT
• Products which will be liable to VAT from 2nd April 2012
• Products which will remain VAT exempt

http://www.royalmail.com/customer-service/terms-and-conditions/vat-changes

Newsletter 50

Please follow the links below for more information about each topic.

AUTUMN STATEMENT

On Tuesday 29 November the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy.

NEW HMRC TASKFORCES

Five new taskforces have been set up to tackle tax evasion in different areas of the country.

VAT AND DUTY ON SHOPPING

Angela Shephard, Head of Customs Policy, HMRC is warning individuals not to get caught out by 'unexpected charges when you are shopping for Christmas bargains this year'.

PARTIES FOR EMPLOYEES

With the season for office parties fast approaching we thought it would be a good idea to remind you of the tax implications.

CONSULTATION - HAVE YOUR SAY

The government has launched a consultation, 'Modernising the administration of the personal tax system'.

FIGHTING CUSTOMS AND EXCISE FRAUD AND TAX EVASION

HMRC are asking for information to help them tackle Customs and Excise fraud and tax evasion.

UNEMPLOYMENT RISES TO 2.62 MILLION

The CBI commented on official data showing unemployment rose by 129,000 to 2.62 million in the three months to September 2011, including a rise in youth unemployment to over a million.

EU VAT REGISTRATION LETTER SCAM

HMRC are warning of a new scam letter which is being sent to businesses.