A report in the Telegraph today revealed how Channel Island online retailers are cheating the UK government out of millions of pounds of tax by just falsely declaring the value of an item so that it falls below the £18 LVCR threshold and increasing the postage cost to cover the difference. Because postage doesn’t attract VAT on import by hiding an items value in the postage CI retailers can avoid even more VAT. The article also shows how HMRC’s lax controls are being abused – particularly in relation to postage and packing allowances – and the fact that HMRC relies on the Channel Islands Authorities to police this trade.
Spokeperson for RAVAS Richard Allen is quoted in the article
“No amount of excuses from HMRC justifies missing this kind of scam”
“Firstly, I don’t accept that UK customs should have any difficulty detecting this kind of abuse particularly when the arrangements that support bulk mail imports into the UK were set up by the UK authorities in the first place. Expecting vested interests in the Channel Islands to police it is like asking the wolves to care for the sheep.”
“Secondly it’s not hard to spot when a package declares a bogus postage on the label at such an unbelievable level that it’s the equivalent of it being marked ‘contains illegal drugs’.
“Thirdly, all these items are supposedly recorded by the authorities so there is no excuse for not also recording postage and packing. If you list everything on a spread sheet a quick formula will bring up anything with an unacceptable level of postage and packing at no extra cost to HMRC thereby increasing VAT revenue. Mis-declaring even once is an offence. How do HMRC intend to catch people out three times a year when they audit only annually? This arrangement should be audited weekly.”