Taxation: Low-value Consignment Relief

Baroness Trumpington Excerpts

Tuesday 1st March 2011 Lords Chamber

[Lord Sassoon]

My Lords, there is a very wide range of estimates of the effect of LVCR but I believe that the HMRC data are as reliable as—more reliable than—any. I am grateful to my noble friend for drawing attention to this issue because the Government are committed to tackling tax avoidance. In that context, we are actively reviewing the operation of this relief. Ministers hope to be in a position to announce any possible changes to the operation of LVCR flowing from the review in the Budget on 23 March.

[Baroness Trumpington]

I am sure that I have missed out on something, but could the noble Lord possibly tell me what it means?

[Lord Sassoon]

My Lords, I have to say that, until a few days ago, I was equally in the dark. I shall try to keep it within the seven minutes.

There is a scheme in European law to make sure that small-value goods imported from outside the European Union can be exempted from value added tax, because it would be disproportionate and a huge cost to consumers and businesses if every small parcel bought from outside the EU had to be scrutinised by the Royal Mail and VAT collected. So there is an exemption under European law for individual consignments up to the value of €22 or £20. At the moment the UK has a limit of £18, below which VAT on imports is not collected. I hope that that explains it.