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VAT: Imports

Volume 481: debated on Tuesday 21 October 2008

To ask the Chancellor of the Exchequer (1) if he will place in the Library a copy of the Memorandum of Understanding between HM Revenue and Customs, Guernsey Post and the Government of Guernsey which establishes the conditions for participation in the scheme to allow low value consignment relief from value added tax for imports of products to the United Kingdom from Guernsey; and what assessment he has made of the applicability of that scheme to products which (a) contain illegal ingredients and (b) about which claims are made which would be illegal were the products to have been placed on the United Kingdom market; (227746)

(2) if he will place in the Library a copy of the Memorandum of Understanding between HM Revenue and Customs, Jersey Post and the Government of Jersey which establishes the conditions for participation in the scheme to allow value consignment relief from value added tax for imports of products to the United Kingdom from Jersey; and what assessment he has made of the applicability of that scheme to products which (a) contain illegal ingredients and (b) about which claims are made which would be illegal were the products to have been placed on the United Kingdom market.

The Memorandum of Understanding with Jersey and Guernsey is currently under review. The MoU establishes an administrative arrangement for import VAT to be collected at the point of sale by the Guernsey postal authorities rather than at import into the UK.

Companies exporting to the UK from Guernsey include the import VAT in their charges to the customer and pass it on to the Guernsey postal authorities, who in turn pay it to HM Treasury.

This arrangement is separate from the low value consignment relief rules, which are set out in EU legislation and transposed into UK law as the Value Added Tax (Imported Goods) Relief (Amendment) Order 1995.

This provides relief from import VAT on consignments of goods not exceeding £18 in value. No customs duty is due on goods imported into the UK from the Channel Islands because, although the Islands are outside the EU for fiscal purposes, they are members of the EU Customs Union.

All imports from the Channel Islands are subject to the standard Customs checks for illegal goods, irrespective of whether they have been imported under the low value consignment relief and/or pre-payment of VAT arrangements.