VAT exempt products inc DVDs and CDs

[Wee Sonny MacGregor]

I spotted the following in Hansard from 1 March. It appears like the Government are trying to plug the loophole of what is known as "low value consignment relief" - VAT-free CDs and DVDs to you and I. Let's hope it remains a "very difficult and technical area" which they can't crack:

Lord Sassoon: There is a scheme in European law to make sure that small-value goods imported from outside the European Union can be exempted from value added tax, because it would be disproportionate and a huge cost to consumers and businesses if every small parcel bought from outside the EU had to be scrutinised by the Royal Mail and VAT collected. So there is an exemption under European law for individual consignments up to the value of €22 or £20. At the moment the UK has a limit of £18, below which VAT on imports is not collected.
Lord Newby: My Lords, will the Minister accept that while at one level it sounds a rather frivolous subject, we are talking about more than 90 per cent of all CD sales in the UK? It has had a damaging impact on retailers and is another example of the Channel Islands being able to benefit from a tax scam. Will he take back to his colleagues in the Treasury the view of many Members of your Lordships' House that this is a classic area where a small change in practice by HMRC can yield very many benefits which not only are good in principle but can also be beneficial to the Treasury?
Lord Sassoon: My Lords, I fully accept my noble friend's statement that this is an important area, which is why the Treasury is looking at it. It flows not from any scam but from the fact that the Channel Islands are treated as outside the European Union for these purposes. That goes back to the accession treaty. The previous Government took steps with the Channel Islands authorities to encourage them to introduce a voluntary restraint and caps on the activities of individual firms in this area. The issue relates not only to CDs and DVDs but to a whole range of goods. It is precisely because this is an important area and we want to make sure that the Exchequer is protected that Ministers are looking at what else we might do.
Lord Davies of Oldham: With online sales increasing at their current levels and with this trade being very much a matter of online sales, it would be very surprising indeed if it was significantly decreasing. Would it not therefore behove the Minister to indicate that the Government intend to act in this area? If it is not an abuse of taxation-if it is not a scam-then it is certainly very close to being an avoidance of tax which we ought to put an end to.
Lord Sassoon: My Lords, I did not want to turn this into a political question; indeed, I attempted to give credit to the previous Government for the actions that they took in conjunction with the Channel Islands authorities. However, the fact is that the VAT loss is estimated to have increased very considerably-by approximately 50 per cent in the past five years-under the previous Government. Members of that Government are now saying that the situation is terrible and we need to take action, but what did they do in the five years in which the amount of revenue lost to the Exchequer increased by 50 per cent? They only talked to the Channel Islands authorities. We have immediately gripped the situation. Ministerial colleagues and HMRC officials are now examining what-in a very difficult and technical area-can be done. If there are things that we believe should be done, they will be announced in the forthcoming Budget.

[didi-5]

They have nothing better to do, that's the problem. What about the tax dodging and false accounting some of their friends in the Lords and the Commons got up to, on a much bigger scale?

The words 'get' and 'life' come to mind ... or at least focus on something a bit more important in the financial scheme of things.

[GoggleboxUK]

Strange how this is rearing its head at the same time the sell off of the Post Office is about to begin.

The VAT on goods bought outside the UK laws are a joke. I recently had to buy some wallpaper borders from the US because they are not available in the UK. I had to buy 6 15 ft borders rather than the 3 I'd have purchased at 33 ft if there was a UK supplier and the total was £68.

Custom charged me an additional £16.

It's OK having nothing better to do when the rewards are that high. At leeast highwaymen wore masks.