Cautious approach from Chancellor on LVCR
Buried deep in today’s pre-budget report (full text here) you will find a fleeting mention of the Low Value Consigment Relief (LVCR) that enables Channel Island companies to export VAT-exempt goods to the UK where their value is lower than £18.
The clause you need to read is on p. 132:
5.136 The Government continues to monitor the £18 VAT-free threshold for imports of small
consignments from outside the EU. Despite the attempts of the Channel Island authorities to
limit the exploitation of these rules, the cost of this relief has increased in the last six months
to around £90 million per annum. The Government will assess the case for reform to protect
tax revenues and will take into account the wider public interest, by balancing the
compliance costs on carriers and importers with the impact on UK based retailers.
What’s really interesting about this statement is that it seems to acknowledge that proportionately LVCR is not a big problem. Particularly as the previous clause refers to Missing Trader Intra-Community (MTIC) VAT costings between £3.5 billion and £4.85 billion in 2005-06. LVCR is costing only £90 million, and as I’ve mentioned before Jersey and its businesses have been incredibly compliant, we even collect VAT for items over £18 and pay it HMCE at no cost. Let’s hope common sense will prevail.
Comments
Leave a Reply