We’ve all heard the reports of small CD retailers (and the like) going out of business due to LVCR (or “low value consignment relief”). This is the rule which exempts from VAT goods (such as CDs) imported into the UK from outside the EU with a value of £18 or less. Following the Budget, the threshold will now be reduced to …. wait for it ….. £15. Well, big deal!
Since those traders who import goods into the UK from places such as the Channel Islands (which are outside of the EU) package products such that, where they can, no single package has a value of more than £18 (i.e. if you order £25 of CDs they will arrive in two separate packages, each with a value of less than £18), this will only catch products which are individually priced between £15 and £18.
There is, of course, some logic behind the rules, being the balancing of the additional VAT revenue on one side against the costs involved in collecting many small amounts of VAT on the other side. However, this logic will be of little comfort to those small businesses who are going, or have gone, out of business.
If , however, you are an importer of CDs or other goods with a value below £18, you can now breathe easy – they could have reduced the rate to £9 (€10).