International Trade

Scales Of Justice Are Out Of Kilter

January 2008
Mike Hodge, International Trade Today

Last year I was at a tax reception talking to a couple of chairmen of the VAT and Duties Tribunal. We got round to discussing the workings of the tribunal and I was asked why I thought so few Customs cases were heard.

As I write this, there have been some 244 Customs cases heard in comparison to 23,000 VAT cases. Many of the VAT cases were concerned with late returns and other procedural matters, which do not affect the Customs side of the taxpayers’ burdens of misery.

Additionally, the VAT rate of 17.5 per cent is more in financial terms than the average Customs duty rates. Of course, antidumping duty and agricultural duties can pump this up but, generally speaking, duty is a lesser amount in terms of value. Also there are some two million VAT registered businesses and only about 20,000 international trade companies paying meaningful amounts of duty.

These reasons go part way towards explaining the disparity between the numbers of those cases.

There is, however, another reason – and that is one of costs. A graphic illustration of this can be seen in VAT and Duties Tribunal case C244, which can be found on the HMRC website.

In essence, Catering Services (GB) Ltd was said to have failed to comply with the EU’s documentary requirements regarding the claiming of a preferential rate of duty on sugar imported from India. The two post-clearance demand notes amounted to the best part of £110,000 and, when taken off the bottom line of any company, would have a fairly disastrous effect. The first C18 was issued on 19 March 2003 and the tribunal case was heard in London, on 11 October 2007. One first of... continued on page two >

 

 

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