With volumes of low value goods shipping direct from China reaching levels previously unseen before UK businesses face a direct threat to their viability. Some argue that it may already be too late, however the UK has an opportunity to change the rules so that the low value imports become subject to import VAT and duty. The failure to properly collect import taxes on mail order goods has been a scandal since the early 2000's when RAVAS first highlighted and ended the Channel Island mail order trade that exploited Low Value Consignment Relief to avoid VAT. Despite measures brought in to make Online Marketplaces collect VAT the problem has not been resolved since goods below £135 face no import duty and since January 2021 there has been no VAT assessment at the border on goods with a declared value of £135 or less. HMRC have claimed that compliance is effective but there is nothing preventing a non-UK based marketplace or retailer ignoring any obligation to collect VAT and just shipping goods to the UK with a value declared at £135 or less (often falsely). This loophole makes it more profitable for a non-UK entity to sell goods to a UK consumer than it is for one based in the UK, which however you slice it is a ludicrous situation. I was asked to comment in this Telegraph piece last week. I remain hopeful that after the election the new Government will take this matter seriously not just for the sake of UK businesses but also the UK exchequer which, let's face it, needs the money.
Richard Allen
Comments