Sunday, February 20, 2011

Air Freight Price Rise As VAT Comes Under Spotlight

Channel Islands Look for Extra Revenue
Shipping News Feature

CHANNEL ISLANDS – UK - As expected Guernsey plans to introduce a raft of cost increases to raise revenue including an air freight charge of 3.4 pence per kilo plus a crane levy which will apply to bulk cargo. Meanwhile the whole situation regarding the VAT avoidance by several UK importers will come under the spotlight on the 1st March.

The new charges are expected to raise around £170,000 in the case of air freight (increases in passenger duty should make a further £600,000) with craneage around £170,000. Although these are currently draft proposals it seems likely they may be introduced as early as this April with the only alternative to raise the extra revenues the authorities insist are essential seemingly a carbon fuel tax.

People in the Channel Isles already pay rates higher than the mainland on certain items, for example the price of the Financial Times rose to £2.30 recently, 30 pence more than elsewhere. Meanwhile the whole subject of VAT avoidance by some of Britain’s biggest retailers is about to come under the spotlight.

For some years goods purchased from UK websites by mail order have not incurred VAT when shipped from the Channel Isles as long as their value did not exceed £18. This has had a serious effect on smaller mainland sellers of things such as music CD’s and DVD’s who cannot match the automatically discounted price.

Now Lord Ralph Lucas, a Conservative peer, will raise the matter on the 1st March in Parliament with a direct question to the coalition requesting the amount in full lost to the treasury due to this loophole. The Channel Islands can do this because of their unique status as a Crown dependency outside of the European Union.

Lord Lucas has phrased his question to elicit the precise totals of imports and exports between the islands and the mainland and which tariff category these fall under. This matter has been raised before but previous Governments have prevaricated despite promises to close the loophole on several occasions.

More complete details of the history and workings of the VAT avoidance loophole can be obtained from a specialist website set up by disgruntled traders under the RAVAS (Retailers Against VAT Avoidance Schemes) banner HERE.