Monday, December 04, 2017

THE 2,000 Euro BTW Scam?

BLOG 183

THE 2,000 Euro BTW Scam?

I tend to watch Panorama each week.  Sometimes they have interesting programmes but I am not sure why I continue to watch their tax output because it is invariably misleading and always strongly biased towards the view that everyone (other than BBC journalists, I assume) is a crook and that privacy (again, other than for BBC journalists, I assume) is such a wicked concept that anyone who wishes to keep their private affairs private must be doing so to avoid tax.  The producers and journalists also seem to believe that everything that happens in the UK ought to be taxed here and the UK’s international treaties that cede to other countries the right to tax their own citizens and corporate vehicles on some receipts from the UK make the UK complicit in tax avoidance.

I think it a shame if the government fix the licence fee at a level which means that the BBC cannot afford to take tax advice in order to ensure that programmes that they make about tax actually reflect the tax system.  I suspect however that it is not budget constraints but a culture within the BBC that integrity is an out-model concept and if a journalist wishes to mislead viewers in order to propagate a personal biased view, that is OK with them – and presumably with the BBC Trust too.

Which brings me to “The Billion Pound VAT Scam” as it was titled.  It is not about a billion pound VAT scam at all.  It is about a few thousand euro BTW scam (the Netherlands equivalent of VAT).

If you didn’t watch the programme, the facts are simple.

a)      The journalist went to China to try to find a smuggler prepared to smuggle Chinese goods into the UK.

b)      He didn’t find one, but did find someone willing to smuggle the goods into the Netherlands.

c)      He purchased a small quantity of goods in China and had them smuggled into the Netherlands.

d)      The goods were then transported from the Netherlands to an Amazon warehouse in the UK.  The journalist (or his editor) did not think it worth mentioning that the EU fundamental concept of freedom of movement of goods means that goods can freely be moved from the Netherlands to the UK without any VAT becoming due anywhere – but that fact would have completely undermined the message that the BBC wished to convey, so it is fortunate that in a half-hour programme, there was not time to mention that.

e)      The journalist registered a UK business with Amazon and sold some of the goods on Amazon.

f)       Amazon did not ask the business for its VAT number.  There is of course no obvious reason why they should do so.  There is no obligation to provide one’s VAT number on a sale to a non-business person and most sales on Amazon are such sales.  In the Budget, the Chancellor proposed to require Amazon to obtain VAT numbers from everyone who uses their platform, so that perceived shortcoming should not be a problem after that has been legislated.  Whether that is “a good thing” is a matter of opinion.  It obviously seriously damages the chances of small UK businesses whose turnover is below the VAT threshold being able to grow.  But the Chancellor clearly believes (not simply in this regard) that killing off small businesses is a reasonable price to pay to raise a bit of extra tax.

g)      The journalist then created another account with Amazon in the name of a Chinese company and it sold something on Amazon for £5 without charging VAT.

h)      Amazon then blocked the Chinese company from selling anything further for 30 days while it investigated it.

i)        The journalist spoke to the new Chair of the Public Accounts Committee, Labour MP Meg Hillier, who was predictably outraged at this so-called VAT avoidance – presumably because she does not know enough about VAT to know that the VAT “avoided” was 0.83p (the VAT on £5) as the supplies by the UK company were well under the VAT registration threshold but there is a nil threshold where a non-established trader sells goods in the UK.  Of course she probably should have been outraged that the UK’s membership of the EU prevents HMRC from taxing movements of goods from EU countries which may exercise laxer control over imports than HMRC does, but she did not express such outrage.

j)        The journalist then spoke to a somewhat bemused HMRC official, Jim Harra, who has a very deep understanding of VAT, told him that he had evaded VAT of a bit over £500 and handed him a cheque.  Jim jovially said for the camera that perhaps he should speak to the journalist off camera.  I hope he did and explained that he had not evaded anything and owed HMRC less than a quid, but thanks for the cheque because HMRC always welcomes people wanting to volunteer money to reduce the national debt.

Of course if the journalist had gone to his editor and said he wanted to do a programme about how to avoid 0.83p VAT and please could the BBC send him to China as part of it, the programme probably would never have got made.  If he had said he wanted to do a programme about how efficient the UK Border Agency is compared with their Netherlands counterparts, that programme probably would not have been made either.

But as it is only licence payers’ money being wasted on misleading propaganda, who cares?



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