Rumour reaches me that companies in Gibraltar are now advertising a VAT abuse service almost\u00a0identical\u00a0to that closed down by the UK that operated through the Channel Islands\u00a0in April this year.<\/p>\n
As I understand\u00a0it goods are sent from the UK to Gibraltar where they are put in a bonded warehouse and then transferred into Spain. This is claimed to be their EU\u00a0entry\u00a0point from a third\u00a0party\u00a0country and as they are worth less than \u00e2\u201a\u00ac22 the entry is claimed to be VAT free. Then they are shipped from Spain to the UK, also VAT free under the LVCR rules as an export from Spain does not have VAT charged on it and tax on arrival in the UK need not be collected due to the low value.<\/p>\n
The legality of the scheme looks low though: placing the goods in a bonded warehouse in\u00a0Gibraltar\u00a0is clearly not the same as the goods being in Gibraltar for VAT\u00a0purposes so that's problem number 1. Quite\u00a0specifically\u00a0bonded warehouses are for VAT purposes not considered to be geographically in the place where they are located so it looks likely for\u00a0these\u00a0purposes that the goods never legally enter Gibraltar and night therefore legally enter Spain from the UK. In that case VAT should be charged on import, I think.<\/p>\n
Problem number 2 is that it looks very unlikely that the goods are\u00a0individually\u00a0imported in Spain so it is hard to see how VAT on import is avoided under LVCR: the bonded warehouse is probably essential to make this work then. And\u00a0therefore, problem 3, if the goods have arrived in Spain VAT free inappropriately it is hard to\u00a0see\u00a0how the scheme can then re-export VAT free.<\/p>\n
All those are issues for HM\u00a0Treasury\u00a0to address. I'm happy to supply them with information.<\/p>\n
But what this does show is that the tac avoiders will not go away and HMRC should have put in place more comprehensive\u00a0measures\u00a0to tackle this problem earlier this year.<\/p>\n","protected":false},"excerpt":{"rendered":"
Rumour reaches me that companies in Gibraltar are now advertising a VAT abuse service almost\u00a0identical\u00a0to that closed down by the UK that operated through the
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