RAVAS – THE STORY SO FAR

CLOSING THE CHANNEL ISLAND VAT LOOPHOLE

RAVAS was founded in 2009 by Richard Allen who in 2007 was forced to close his long established online mail order music business as a result of unfair, VAT free competition from The Channel Islands. This VAT free competition was due to the abuse of an import VAT Exemption called Low Value Consignment Relief (LVCR) which was being used by online retailers to avoid charging VAT on mail order goods sold to UK customers via The Channel Islands. Goods sourced in the UK were deliberately sent to the Islands so that they could be sold back again to avoid VAT. The most well known items sold were CDs and DVDs but there was a vast array of other low value goods being sent from the Channel Islands including cosmetics, cut flowers, plug plants, video games, health supplements, PC consumables (e.g. printer cartridges), stationary, greetings cards, clothing, toys, sports accessories and contact lens solutions.

Having campaigned on the issue since 2005 Richard Allen had lodged a complaint at the European Commission in 2006 which in 2010 resulted in the UK Authorities facing infraction proceedings if they did not stop the abuse of LVCR. As a direct result of this complaint in November of 2011 the UK Government announced that LVCR would no longer apply to mail order goods sent from The Channel Islands to the UK.

In March of 2012 RAVAS also supported HMRC in a major court hearing in which the Channel Islands tried to block the removal of LVCR. RAVAS provided detailed evidence to the court of the abuse and this was crucial to the outcome. The court found that the UK was right to remove LVCR and end the abuse. On April the 1st 2012 LVCR was removed from Channel Island mail order goods and within a year the Channel Island trade had collapsed.

The removal of LVCR from Channel Island mail order goods saved many UK businesses who for well over a decade had struggled against a growing tide of VAT free competition. RAVAS was asked to contribute to a report produced by Ernst and Young for The European Commission

ENDING THE BILLION POUND VAT FRAUD

In 2015 Richard Allen made contact with Neven Juretic who had set up VATfraud.org Neven had uncovered a £1billion VAT fraud on Amazon and eBay but was being ignored by HMRC. Chinese sellers were openly selling stock from UK warehouses and not accounting for VAT and nothing was being done to stop them. In October of 2015 Richard and Neven took a dossier to the EU Commission and various national newspapers. As a result they obtained front page coverage in the FT and a feature on BBC Radio 4 which put this issue firmly in the public eye. They also gave the dossier to George Osborne The Chancellor of the Exchequer and David Gauke, Financial Secretary to The Treasury. This led to HMRC contacting RAVAS asking for help in November.

Various meetings followed in 2016 and the matter was also raised in Parliament most notably by Lord Lucas and Chris Heaton-Harris MP. Legislation was proposed by HMRC that purported to make Amazon and eBay liable for the VAT but as RAVAS and VATfraud.org pointed out it did no such thing. Even though it was inadequate and RAVAS protested it was introduced later that year. Eventually in April of 2017 the National Audit Office looked at the issue and with the assistance of RAVAS and VATfraud.org produced a report Investigation into Overseas Sellers failing to Charge VAT on Online Sales which criticised HMRC’s failure to deal with the fraud. It also noted that the legislation remained inadequate and this resulted in the legislation being improved in the Finance Bill in 2017 so that retailers were obligated to display VAT Numbers . RAVAS was mentioned in Parliament.

Public Accounts Committee and Treasury Committee hearings followed at which senior HMRC officials including Jim Harra and Jon Thompson were questioned along with Steve Dishman vice-president at Amazon and Joe Billante, an eBay vice president. Richard Allen of RAVAS also gave evidence. RAVAS and VATfraud.org played a key role in the Panorama documentary The Billion Pound VAT Scam that was broadcast in December 2107. As a result the issue of the VAT fraud on Amazon and eBay was kept in the public eye throughout 2017 and 2018.

In 2019 with the assistance of RAVAS, Lord Leigh and Lord Lucas raised the issue a number of times in the House of Lords and also with The Treasury highlighting the huge sums of VAT that were being lost. SME representative body The Genesis Initiative adopted the RAVAS campaign as did The Association of Accounting Technicians and in particular their Head of Public Affairs and Policy, Phil Hall. The AAT had been following the work of RAVAS and VATfraud.org and also noted the huge number of complaints from their members regarding sellers evading VAT on Amazon and eBay. The AAT began actively campaigning on the issue in Westminster with Labour, SNP and Conservative MPs. Lord Leigh and Lord Lucas intensified their approaches to the Government highlighting the work of RAVAS and VATfraud.org and the large amount of VAT revenue that was being lost. Papers were drafted by RAVAS and VATFraud.org and submitted to The Treasury.

In April of 2020 HMRC approached a small number of organisations including RAVAS and VATfraud.org to consult on proposals and on the 20th of July 2020 the Government published a technical paper explaining the changes to the VAT treatment of overseas goods sold to customers .

Finally after five years of campaigning RAVAS together with VATfraud.org has successfully made online marketplaces collect VAT. The UK is due to introduce a set of measures designed to prevent on UK sellers on online marketplaces evade VAT. They are the strongest online VAT measures in the world and should hopefully see a return to a level playing field for UK retailers who have for two decades suffered from VAT abuse.

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