Mail-order businesses face large VAT bill
Mail-order retailers could be facing hefty retrospective tax bills after a decision in the House of Lords overturning a previous ruling on VAT.
This was the warning given by VAT experts at PricewaterhouseCoopers after Plantiflor, a company, which sells horticultural products via mail order, lost its case with Customs & Excise over the VAT paid on postage.
Customers of Plantiflor that requested their goods to be sent via Parcel force were charged an additional £2.50. An earlier Court of Appeal judgement had ruled the postal service was exempt from VAT under EU law.
But the House of Lords decision now means Plantiflor will have to account for VAT on the postage element of the delivery charge, backdated for three years.
Jim Wilkinson, head of retail VAT at PwC, said: ‘Customs & Excise can reclaim VAT going back three years. For a company such as Plantiflor, who make in excess of 400,000 deliveries a year, this could mean a tax bill of more than £300,000.
‘Retailers who are affected by the judgement should seek advice on their position and on whether any attempts by Customs & Excise to recover VAT on historical transactions are valid.’
