Monday, 1 September 2014

Removing the De Minimis Limit on GST

Senator Ozouf said: "As a result of research undertaken by the Customs and Immigration Service, based on 2012 data, it is estimated that if the de minimis limit was removed, then the potential extra import GST revenue would be £783,000 per annum."

I have today a guest posting on the subject. See also my own blog posting at:

Removing the De Minimis Limit on GST
Guest Posting by Adam Gardiner
You are right about the absurdity of trying to collect GST on low value items.
You ask several questions as to how it would be collected. But that is only the tip of the iceberg. The administration process is already long-winded and messy for goods over the de-minimis if you are not registered for GST. A business may not be registered for simple fact (and on the advice of C&E) that it creates a mass of unnecessary paperwork as there are two sides to GST collection.
On the one hand, if registered then you are obliged to make a GST return -the goods themselves are released through system without the need to pay 'in advance'. That return is 'balanced' on value of goods imported against GST collected at point of sale. If not registered, then the freight forwarder will ring the consignee to advise that they are holding goods pending GST settlement and will provide you with a CLC number. The theory is that then you go onto the C&E Caesar II website, enter the CLC number and pay online which then releases goods for delivery. You can alternatively attend at Maritime House and clear the consignment by paying cash.
You mention logistics. There are many.
1. Until the GST is paid and CLC cleared, the goods remain in the custody of the freight forwarder - which equally means Jersey Post if item(s) had been sent by that method. Where will all these small and almost valueless packets and parcels be stored until someone is good and ready to visit Maritime House.
2. Very few will want to pay such small amounts on their credit/debit cards if indeed transactions of such small value are even accepted by the payment gateway. One thing is for sure, C&E would be losing £'s on everyone through transaction charges. Can you imagine a constant stream of hundreds of people turning up at Maritime House to pay cash to have their goods released.
3. What happens to the small birthday or Christmas presses sent by auntie worth less than £100. Not much of a pressie where it's going to cost you £5 to collect it! A birthday surprise it would surely be! The lower the value the worse it gets. Many will simply leave it - so storage etc again becomes a big problem..some of which may be long-term. Under the Royal Mail Charter, Jersey Post would not be able to dispose of unclaimed items nor allowed under the law to pass them over to any third party (that includes the States of Jersey) unless they were an illegal import.
4. GST is actually payable on the invoice value. It seems to me that it would then follow that every package, parcel and envelope containing a taxable item albeit of low value (and that could be thousands daily)  would need to be accompanied by an invoice. How on earth would that be possible if not consigned from a commercial source?
5. Lastly. As well pointed out, such a move would suck in an army of C&E officers to monitor the entire imports into the island by whatever method and any GST raised would simply vanish into administration costs and not add one penny to the fact likely to diminish Treasury revenues.

1 comment:

James said...

5. Imports via whatever method? You're kidding. Were I to go and buy a new suit in England, then wear it home on the plane, who would know?

I do regular runs to France in the car, and while there I stock up on specific food items. C&E have neither the space, time, nor manpower to check the boot of every car coming off the ferry, and it would kill the tourist trade if they tried. And where would they stop? "Did you buy that tube of Polos on the ferry, sir? I'll have to charge you 2p GST".

The sheer stupidity of this beggars belief!