UK Abolishes £15 VAT Loophole

[144man]

From 1st April, 2012, the UK is abolishing the concession whereby companies importing goods below the value of £15 do not have to account for the VAT thereon. This is likely to hit HMV and Amazon UK's online business particularly hard as they import goods from the Channel Islands to take advantage of this.

No doubt Amazon is strong enough to cope, but one wonders if this may be the last straw for HMV.

[roger]

Well .. it's a bit disingenious to say that they "import" goods from the Channel Islands .. what these companies do is "export" goods from the British Mainland TO the Channel Islands [[without paying any import duty or VAT there) then post them back to the individual customers who have ordered the goods on the British mainland [[again without paying any import duty or VAT).

This undercuts the prices charged by shops on the British mainland who have to charge VAT on goods that pass through their doors.

What closing this loophole is likely to do is lessen the price differential between goods bought in the shops on the British mainland as opposed to those bought via the internet.

Roger

P.S. .. For those in North America wondering what VAT is it is "Value Added Tax" .. a variety of Sales Tax.

[144man]

I didn't particularly want to go into the technicalities. It's more the effects of the change that I'm wondering about.

Incidentally, the concession remains for goods received from outside the European Union.

[roger]

I didn't particularly want to go into the technicalities. It's more the effects of the change that I'm wondering about.

Incidentally, the concession remains for goods received from outside the European Union.

Well .. actually the Channel Islands ARE outside of the "European Union" so there must be other factors at play here.

As I was trying to point out in my earlier post, this isn't in practice anything to do with restricting "proper" imports, it's to do with closing a loophole that British "Land Based" Music Retailers have been complaining about.

HMV, of course, is both a "Land Based" and a "Net Based" retailer, so I imagine the effect on them will be neutral.

Roger

[Pop Alexandra]

I just read that this loophole existed in the past. Were there any significant decreases in revenue for the impacted traders?
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Alexandra
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