VAT – Low Value Consignment Relief
New legislation will be introduced in Finance Bill 2011 to reduce the level at which the low value consignment relief (LVCR) applies from £18 to £15 from 1 November 2011.
From this date if an item is imported that has a value of £15.01 or greater it will be subject to import VAT. This is the threshold below which goods imported from outside the EU are VAT-free. This move is part of the Government’s plans to tackle the VAT loophole used to import low value items, such as DVDs and CDs, into the UK.
The Government have also said that they will explore other options with the European Commission to limit the scope of the relief, including the possibility of seeking derogation from the relevant EU rules. It is the Government’s intention to stop the LVCR from being exploited for a purpose for which it was not intended and to improve the competitive position of UK small and medium enterprises.