Budget explained – VAT loophole

accawebmaster —  23 March 2011 — Leave a comment

By ACCA's budget team

As predicted before the Budget, the Government is to tackle the VAT loophole used to import low value items, such DVDs and CDs, into the UK. This ‘Low Value Consignment Relief’ (LVCR) has been used by companies like Amazon and Play.com with operations based in the Channel Islands.

The LVCR threshold which is currently £18, and which is used to import goods from outside the EU free of VAT, will be reduced to £15 with effect from 1 November 2011.

The proposal is to limit the scope of the LVCR to what it was initially intended for. This will require input from the European Union as the UK will be seeking a derogation.  It is not expected to provide details on this derogation till the Budget 2012.

Full Budget comment here

 

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