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Written Ministerial Statements

Wednesday 9 November 2011


VAT—Low Value Consignment Relief

The Exchequer Secretary to the Treasury (Mr David Gauke): I am today announcing further reforms to the relief from import VAT known as Low Value Consignment Relief (LVCR). These reforms will make a positive contribution to the UK economy as well as contributing towards the fairness of the tax system and reducing the deficit.

In Budget 2011, the Chancellor of the Exchequer announced that the Government intended to take action to end the exploitation of LVCR, which in recent years has been used on an increasingly large scale to sell low value goods free of VAT to UK consumers, a purpose for which it was never intended. Most of this trade originates from, or is routed through, the Channel Islands.

Our objectives in reforming LVCR are twofold. First, to ensure that UK companies, especially small and medium-sized enterprises, can compete on a level playing field with companies with operations in the Channel Islands. Secondly, to protect tax revenue for the Exchequer while taking into account the costs of collecting small amounts of VAT.

As the first step towards reform of the way in which the UK applies the LVCR rules we legislated in Finance Act 2011 to reduce the LVCR value threshold, below which items are imported free of VAT, from £18 to £15. That change is being implemented from 1 November.

In taking that legislation through the House I made it clear that it was only the first step towards preventing the exploitation of LVCR.

I can announce today that, as from 1 April 2012, LVCR will no longer apply to goods supplied commercially, as part of a distance selling transaction, from the Channel Islands. Legislation to enact this change will be published in draft on 6 December, for inclusion in Finance Bill 2012.

This will mean that supplies from business in the Channel Islands bear the same VAT liability as supplies from VAT-registered businesses in the UK.

My decision to focus action on imports from the Channel Islands reflects:

By far the greatest volume of all international parcel post to the UK from outside the EU is estimated to originate in the Channel Islands, and much of it appears to be linked to the exploitation of LVCR.

Companies based in the Channel Islands can participate in HMRC’s “Import VAT Accounting Scheme”, which allows automatic collection of UK import VAT at source, thus avoiding delays at sorting offices and VAT collection surcharges. The ease of access of companies based in the Channel

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Islands to the UK consumer market is therefore very similar to that of domestic UK-based companies, in contrast to their non-EU counterparts.

This measure is expected to increase receipts by approximately £100 million per annum. The final costing will be subject to scrutiny by the Office for Budget Responsibility, and will be set out at the autumn statement 2011.

LVCR will continue to apply with the lower £15 threshold to commercial supplies from other non-EU jurisdictions. I have no current plans for further changes to this threshold but will be watching its operation carefully and will take further action if necessary.

The existing import reliefs for gifts (non-commercial consignments) sent from outside the EU, including from the Channel Islands, also remains unchanged.

Cabinet Office

Review of the Charities Act

The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd): I am today announcing that Lord Hodgson of Astley Abbotts has been appointed to undertake a broad review of the legal and regulatory framework for charities. Under section 73 of the Charities Act 2006 a person must be appointed to review the operation of the Charities Act 2006 within five years of enactment. The charity law review will not only consider the operation of the Charities Act 2006, but will also consider whether further changes are needed to ensure that the legal and regulatory framework for charities is clear and effective.

The terms of reference for the review are broad. They include issues that the review must cover as set out in section 73 of the Charities Act 2006, issues that the Government believe should be addressed, and issues that the charity sector has asked to be considered. The terms of reference for the review are available on the Cabinet Office website at: www.cabinetoffice.gov.uk, and I have arranged for a copy to be placed in the House Library.

Lord Hodgson will set out, in due course, how charities and other stakeholders will be able to engage in the review process.

The aim is for the review to report in June 2012, and a copy of the report of the review will be laid before Parliament.


Call-out Order

The Minister for the Armed Forces (Nick Harvey): With the expiry of the call-out order made on 24 October 2010, a new call-out order has been made under section 56 of the Reserve Forces Act 1996 to enable reservists to continue to be called out into permanent service to support our wider efforts to counter the threat from international terrorism and piracy, and to assist our maritime security objectives. The order takes effect from 8 November 2011 and ceases to have effect on 7 November 2012. Some 98 members of the reserve forces were called out under this order last year and their continued support is greatly appreciated and valued.

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Parliamentary Written Question (Correction)

The Minister of State, Department of Health (Mr Simon Burns): I regret that the written answer given to the right hon. Member for Holborn and St Pancras (Frank Dobson) on 25 October 2011, Official Report, column 192W, contained some incorrect figures in the table.

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The information provided in the original answer contained some unvalidated data but it has subsequently been brought to my attention that the Department holds more accurate, cleansed and validated data, which have now been provided where available. I have also taken this opportunity to provide the Connecting for Health figures for 2009-10 and 2010-11 rounded to the nearest £1,000, and figures that were previously not available.

A table showing the corrected figures is given below.

Consultancy expenditure 2006-07 to 2010-11

2010-11 2009-10 2008-09 2007-08 2006-07

NHS bodies (excluding foundation trusts)(1)






Executive non-departmental public bodies, executive agencies and special health authorities (2,3 & 4)






Connecting for Health






(1) Primary care trusts (PCTs), strategic health authorities (SHAs) and NHS trusts. The Department does not collect data from NHS foundation trusts. Where an NHS trust obtains foundation trust status part way through any year, the data provided are only for the part of the year the organisation operated as an NHS trust. Data for consultancy services expenditure were collected from NHS bodies for the first time in 2007-08. Source: NHS audited summarisation schedules. (2 )Figures for 2009-10 and 2010-11 for executive non-departmental public bodies, executive agencies and special health authorities are on a different basis to those for earlier years and are therefore not directly comparable. (3) Figures included for the Human Fertilisation and Embryology Authority (HFEA) are for “Professional and administrative fees”. This category includes litigation and other legal costs as well as expenditure on consultancy services, which cannot be separately identified. (4) Figures included for the Care Quality Commission do not include external legal advice. It is not possible to identify how much of this expenditure falls within the definition of “consultancy services”.